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Loan characteristics, firm preferences and investment: Evidence from a unique experiment

Author

Listed:
  • Brutscher, Philipp-Bastian
  • Heipertz, Jonas
  • Hols, Christopher

Abstract

This paper uses a unique experiment conducted as part of the Investment Survey of the European Investment Bank (EIB) to provide novel evidence on firms' preferences over loan characteristics and the relation between terms of credit and investment decisions. The design of the experiment allows revealing firm's financing preferences and willingness-to-pay in a clean and straightforward manner. The results show that firms are especially sensitive to the loan amount, the collateral requirement and the interest rate. Results are heterogeneous between sectors, size classes and types of projects.

Suggested Citation

  • Brutscher, Philipp-Bastian & Heipertz, Jonas & Hols, Christopher, 2017. "Loan characteristics, firm preferences and investment: Evidence from a unique experiment," EIB Working Papers 2017/03, European Investment Bank (EIB).
    • Handle: RePEc:zbw:eibwps:201703
    as

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    References listed on IDEAS

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    Cited by:

    1. Brutscher, Philipp-Bastian & Ravillard, Pauline, 2019. "Promoting energy audits: Results from an experiment," EIB Working Papers 2019/06, European Investment Bank (EIB).
    2. Philipp-Bastian Brutscher & Christopher Hols, 2020. "The European Corporate Equity Puzzle," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 62(1), pages 69-104, March.
    3. Brutscher, Philipp-Bastian & Hols, Christopher, 2018. "The corporate equity puzzle," EIB Working Papers 2018/03, European Investment Bank (EIB).

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    More about this item

    Keywords

    firm preferences; investment decision; corporate finance;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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