Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/246183 
Year of Publication: 
2021
Series/Report no.: 
ECB Working Paper No. 2606
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
We estimate a FAVAR with Bayesian techniques in order to investigate the impact of loan supply conditions on euro area corporate investment and its financing structure. We identify shocks to overall demand and loan supply with sign and impact restrictions. Although tightened financial conditions have adversely impacted corporate investment during and after the sovereign debt crisis, the resulting impediments in loan supply, illustrated by lower loan volumes and higher spreads, have been partly alleviated by strengthened corporate debt issuance. We show that (1) part of the protracted increase in debt to loan ratio since the crisis reflects bottlenecks in the provision of bank credit and (2) the tightened loan supply has been more adverse for small corporations with limited market access. Overall, our analysis of macro-financial developments suggests the need for policy actions to deepen the European corporate debt market and enhance market access for smaller corporates.
Subjects: 
financing structure
small and medium size corporates
size spread
corporatedebt issuance
FAVAR model
JEL: 
E22
E66
G21
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-4859-3
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.