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Financial Accelerator Effects in the Balance Sheets of Czech Firms

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Author Info
Roman Horváth () (Czech National Bank, Monetary and Statistics Department, Prague, Czech Republic, Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)

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Abstract

In this paper we examine a financial accelerator hypothesis analyzing the determinants of firm-level interest rates. Using a panel of the financial statements of 448 Czech firms in 1996- 2002, we find that firm’s balance sheet indicators are important determinant for the firm-level interest rates. Indebtness and market access matter in particular. The strength of balance sheets is procyclical. There is also evidence that monetary policy has stronger effects on small firms and during a period of the excess demand for credit (but not during a downturn).

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File URL: http://ies.fsv.cuni.cz/default/file/download/id/4897
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Publisher Info
Paper provided by Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies in its series Working Papers IES with number 96.

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Length: 19 pages
Date of creation: 2005
Date of revision: 2005
Handle: RePEc:fau:wpaper:wp096

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Related research
Keywords: Monetary policy transmission; interest rates; balance sheet channel; financial accelerator;

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Find related papers by JEL classification:
G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure

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  2. Konings, Jozef & Rizov, Marian & Vandenbussche, Hylke, 2003. "Investment and financial constraints in transition economies: micro evidence from Poland, the Czech Republic, Bulgaria and Romania," Economics Letters, Elsevier, vol. 78(2), pages 253-258, February. [Downloadable!] (restricted)
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  4. Emmanuel Dhyne & Luis J. Álvarez & Hervé Le Bihan & Giovanni Veronese & Daniel Dias & Johannes Hoffmann & Nicole Jonker & Patrick Lünnemann & Fabio Rumler & Jouko Vilmunen, 2005. "Price setting in the euro area: some stylized facts from individual consumer price data," Working Paper Series 524, European Central Bank. [Downloadable!]
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  5. Anca Pruteanu, 2004. "Was There Evidence of Credit Rationing in the Czech Republic?," Eastern European Economics, M.E. Sharpe, Inc., vol. 42(5), pages 58-72, September. [Downloadable!] (restricted)
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  7. Spiros Bougheas & Paul Mizen & Cihan Yalcin, 2004. "Access to External Finance : Theory and Evidence on the Impact of Firm-Specific Characteristics," Working Papers 0406, Research and Monetary Policy Department, Central Bank of the Republic of Turkey. [Downloadable!]
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  10. Jan Hanousek & Randall K. Filer, 2003. "Investment, Credit Rationing, and the Soft Budget Constraint: What Would a Well-Functioning Credit Market Look Like?," Microeconomics 0306003, EconWPA. [Downloadable!]
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  11. Frederic Boissay, 2001. "Credit rationing, output gap, and business cycles," Working Paper Series 087, European Central Bank. [Downloadable!]
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