The Impact Of The 2008-2009 Global Crisis On Retailers’ And Core Industry Firms’ Loan Applications: The Case Of Eastern Europe And Central Asia

In this study, we examine two groups of firms in Eastern Europe and Central Asia: retailers and core industry firms. We focus on these firms’ new loan applications before and after the 2008-2009 Global crisis. Our results show that there was a statistically significant decrease in the percentage of retailers and core industry firms that applied for a new loan post-crisis. We find that fewer retailers needed a loan post-crisis and that they thought that all aspects of financing significantly improved after the crisis. On the other hand, more core industry firms needed a loan post-crisis. According to the core industry firms, certain aspects of financing (i.e. the complexity of application procedures and the interest rates) worsened, while certain other aspects (i.e. collateral requirement and the required loan size and maturity) improved after the crisis. We also find that there was a statistically significant decrease in the percentage of retailers and core industry firms that had their financial statements checked/certified by an external auditor. Finally, we find that, post-crisis, “access to finance” was seen as a smaller obstacle by both groups of firms (although core firms stated that certain aspects of financing had deteriorated). We conclude that, post-crisis, fewer retailers applied for a new loan because fewer firms needed funding. On the other hand, post-crisis, fewer core firms applied for a new loan because of more complex application procedures, higher interest rates, and their belief that it would not be approved.