Lessons from the Debt Crises: The Need for a New Approach to the Study of Firm Leverage
AbstractOne of the crucial aspects of the current crisis is the excessive leverage taken on board by the different agents working in the economy. This accumulation of debt is now all too evident and its pernicious effects are being analysed in a multitude of studies. During the expansive cycle, neither institutions nor academics warned of the unravelling scenario and its possible consequences. Hence, the recent crisis sh*ould lead us to speculate whether or not the financial leverage in system has been dealt with adequately, or even properly understood. This paper describes previous theoretical approaches to decision taking for capital structure and suggests a new focus which integrates all of them. The second part of the paper investigates the evolution of companies’ banking debt in Spain for the period 2000 to 2009 and compares this evolution with that of other European countries (in particular Portugal, Italy, France and Germany).
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Bibliographic InfoArticle provided by University of Santiago de Compostela. Faculty of Economics and Business. in its journal Revista Galega de Economía.
Volume (Year): 21 (2012)
Issue (Month): ex ()
Enterprises debt finance; Leverage; Capital structure; Institucional factors; Cultural factors; Sociological factors; Firm-especific factors; Debt crises in Europe;
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