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Corporate Investment in Bank-Dependent Companies in Crisis Time

Author

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  • Bukalska Elżbieta

    (Maria Curie Sklodowska University, Department of Economics, pl. Marii Skłodowskiej-Curie 5, 20-031 Lublin, Poland)

  • Skibińska-Fabrowska Ilona

    (Maria Curie Sklodowska University, Department of Economics, pl. Marii Skłodowskiej-Curie 5, 20-031 Lublin, Poland)

Abstract

The aim of this paper is to ascertain corporate investment reaction in bank-dependent companies in times of crisis. Our investigation covers the differences in corporate investment reaction due to the global financial crisis (GFC) of 2007–2009 and the COVID-19 crisis of 2020–2021. We utilized panel data of companies present on the Warsaw Stock Exchange during the GFC and COVID-19 crisis—932 firm-year observations. We found a negative relationship between bank dependence (static ratio) and corporate investment, but a statistical significance was found only for the GFC period. We also found a positive relationship between bank dependence (dynamic ratio) and corporate investment, but statistical significance was found only for the GFC period. Additionally, we found that during the COVID-19 crisis, the level of corporate investment was at its lowest level, but the biggest drop was noticeable during the GFC when compared to the pre-GFC period. Our article contributes to the existing research by being part of the research on corporate investment and capital structure. It consists of the research on one of the determinants of the corporate investment and capital structure decisions—macroeconomic turbulence manifested in economic crises.

Suggested Citation

  • Bukalska Elżbieta & Skibińska-Fabrowska Ilona, 2023. "Corporate Investment in Bank-Dependent Companies in Crisis Time," Central European Economic Journal, Sciendo, vol. 10(57), pages 1-22, January.
    • Handle: RePEc:vrs:ceuecj:v:10:y:2023:i:57:p:1-22:n:1
    DOI: 10.2478/ceej-2023-0001
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    More about this item

    Keywords

    corporate investment; corporate debt; crisis time; G3; M2; E5;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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