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The Bank Loans Importance, Information Asymmetry And The Impact Of Financial And Economic Crisis On Corporate Financing

Author

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  • Mircea Tiberiu Ducai

    (University “Babes-Bolyai ” of Cluj-Napoca Faculty of Economics and Business Administration Cluj-Napoca, Romania)

Abstract

Bank loans have an increasing role for corporate activities. In most countries, bank loans are the main source of financing for small and medium-sized enterprises. Even though the role of banks decreased in the last years, banks take advantage of a privileged position which allows them to provide liquidity cheaply than other intermediaries. The activity of bank lending is often influenced by the adverse selection due to the fact that corporate clients are often reluctant, in providing the complete and real information about them. As a result the information asymmetry may have a negative impact both on banks and companies. The most important effects of the financial and economic crisis on the companies are the drastic drop in demand for goods and services and a tightening in credit terms, which are severely affecting their cash flows. Also, companies face financing constraints which often amplify the effects of crisis.

Suggested Citation

  • Mircea Tiberiu Ducai, 2012. "The Bank Loans Importance, Information Asymmetry And The Impact Of Financial And Economic Crisis On Corporate Financing," Revista Tinerilor Economisti (The Young Economists Journal), University of Craiova, Faculty of Economics and Business Administration, vol. 1(18), pages 29-34, April.
  • Handle: RePEc:aio:rteyej:v:1:y:2012:i:18:p:29-34
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    File URL: http://feaa.ucv.ro/RTE/018-04.pdf
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    References listed on IDEAS

    as
    1. Pietro Alessandrini & Andrea F. Presbitero & Alberto Zazzaro, 2009. "Banks, Distances and Firms' Financing Constraints," Review of Finance, European Finance Association, vol. 13(2), pages 261-307.
    2. Yener Altunbas & Alper Kara & David Marques-Ibanez, 2010. "Large debt financing: syndicated loans versus corporate bonds," The European Journal of Finance, Taylor & Francis Journals, vol. 16(5), pages 437-458.
    3. Anil K. Kashyap & Raghuram Rajan & Jeremy C. Stein, 2002. "Banks as Liquidity Providers: An Explanation for the Coexistence of Lending and Deposit-Taking," Journal of Finance, American Finance Association, vol. 57(1), pages 33-73, February.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    bank loans; lending; financial and economic crisis; information asymmetry; credit constraints;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G01 - Financial Economics - - General - - - Financial Crises
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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