Why do firms borrow on a short-term basis ? Evidence from European countries
AbstractThis paper investigates empirically the use of short-term bank loans by firms. We face two analytical frameworks. According to the corporate finance theory, short-term and long-term ebts are substitutes, while in the credit channel literature they are distinct and complementary vehicles. We estimate a model that explains the level of short-term bank debt, using panel data from the BACH database for six European countries (1989-2003). Our results indicate that the two types of bank loans are complements. They show that short-term bank debt should be analysed as a specific vehicle that finances current assets, as in the credit channel literature.
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Bibliographic InfoPaper provided by University of Paris West - Nanterre la Défense, EconomiX in its series EconomiX Working Papers with number 2009-14.
Length: 32 pages
Date of creation: 2009
Date of revision:
corporate short-term debt; debt maturity structure; credit channel;
Find related papers by JEL classification:
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
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