IDEAS home Printed from https://ideas.repec.org/a/boh/actaub/v15y2012i2p121-128.html
   My bibliography  Save this article

Issues with Debt Funding: Some Empirical Evidence Post-GFC

Author

Listed:
  • Segu Zuhair

    () (Victoria University, Melbourne)

  • Riccardo Natoli

    () (Victoria University, Melbourne)

Abstract

The recent debt-crisis, referred to as the Global Financial Crisis (GFC), resulted in significant worldwide impacts. The main reason for the crisis was, ironically, the ease with which debt was made available, especially to those with a poor credit history. The crisis then resulted in a shortage of funds or an unwillingness to make credit available. This type of behaviour reflects a general withdrawal by international banks and other lending bodies from any type of activity, regardless of the type of lending and of risk where a withdrawal by one player tends to trigger similar actions by others. The purpose of the present paper is to examine debt funding in Australia post-GFC by first conducting a review of the extant literature followed by the results of an empirical study. The study was conducted among a sample of 59 Australian firms across more than 12 industries covering credit up to 10 years long. The result showed that nearly a third of the firms were in need of additional fund of which nearly half were in the region of $50m to $500m (AU$), with a maturity of up to three years. The most popular sources of funds are the domestic banks (70 %) and international banks (45 %). These outcomes are affected by the credit rating and the size of the firms, measured by gross annual turnover. The firms with a lower credit rating tend to exclude themselves from seeking high quality credit. The level of credit sought by the firms does not seem to be a factor determining the availability of credit.

Suggested Citation

  • Segu Zuhair & Riccardo Natoli, 2012. "Issues with Debt Funding: Some Empirical Evidence Post-GFC," Acta Universitatis Bohemiae Meridionales, University of South Bohemia in Ceske Budejovice, vol. 15(2), pages 121-128.
  • Handle: RePEc:boh:actaub:v:15:y:2012:i:2:p:121-128
    as

    Download full text from publisher

    File URL: http://ojs.ef.jcu.cz/acta/article/download/428/420
    Download Restriction: no

    References listed on IDEAS

    as
    1. Auboin, Marc & Meier-Ewert, Moritz, 2003. "Improving the availability of trade finance during financial crises," WTO Discussion Papers 2, World Trade Organization (WTO), Economic Research and Statistics Division.
    2. John D. Burger & Francis E. Warnock, 2006. "Local Currency Bond Markets," IMF Staff Papers, Palgrave Macmillan, vol. 53(si), pages 1-7.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Debt Crisis; Debt Funding; Global Financial Crisis;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:boh:actaub:v:15:y:2012:i:2:p:121-128. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tereza Š ástková). General contact details of provider: http://edirc.repec.org/data/efjcucz.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.