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Estimating the Borrowing Behavior of French and German Firms. An Econometric Analysis / Verschuldungsverhalten französischer und deutscher Unternehmen. Eine ökonometrische Analyse

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Listed author(s):
  • Kremp Elizabeth

    ()

    (Ministère de L’Economie des Finances et de l’lndustrie, Service des Etudes et des Statistiques, Industrielles (SESSI, DIGITIP), 20 avenue de Ségur, F-75353 Paris 07 SP, France)

  • Stöß Elmar

    ()

    (Deutsche Bundesbank, P.O.B.IO 06 02, D-60006 Frankfurt/Main)

Abstract

This paper investigates the borrowing behavior of 2,900 French and 1,300 German firms over the 1987-95 period. Both samples based on data sets of the Banque de France and the Deutsche Bundesbank not only include large but also small and medium-sized enterprises. Applying GMM techniques, we estimate identical debt equations for the two total samples and by size class. Despite the large differences between the two countries in term of debt trends over time and size class the main result is the similarity of a few determinants between France and Germany. E.g. we find that firm growth has a positive impact on borrowing according to the theory of signalling whereas the negative correlation of profit and debt supports pecking order approach and the cost of finance has a negative impact on leverage, too. Additionally, the study can provide some insights for the monetary transmission mechanism in both EMU member countries.

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Article provided by De Gruyter in its journal Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik).

Volume (Year): 221 (2001)
Issue (Month): 5-6 (October)
Pages: 620-647

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Handle: RePEc:jns:jbstat:v:221:y:2001:i:5-6:p:620-647
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Keywords: Corporate finance; borrowing behavior; monetary policy; panel data; Unternehmensfinanzierung; Verschuldungsverhalten; Geldpolitik; Paneldaten;

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  1. Bronwyn H. Hall, 1992. "Investment and Research and Development at the Firm Level: Does the Source of Financing Matter?," NBER Working Papers 4096, National Bureau of Economic Research, Inc.
  2. Jérôme Bourdieu & Béatrice Colin-Sédillot, 1993. "Structure du capital et coûts d'information : le cas des entreprises françaises à la fin des années quatre-vingt," Économie et Statistique, Programme National Persée, vol. 268(1), pages 87-100.
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  11. Rajan, Raghuram G & Zingales, Luigi, 1995. " What Do We Know about Capital Structure? Some Evidence from International Data," Journal of Finance, American Finance Association, vol. 50(5), pages 1421-1460, December.
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  13. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
  14. Anderson, T. W. & Hsiao, Cheng, 1982. "Formulation and estimation of dynamic models using panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 47-82, January.
  15. Dornbusch, Rudiger & Favero, Carlo A. & Giavazzi, Francesco, 1998. "A Red Letter Day?," CEPR Discussion Papers 1804, C.E.P.R. Discussion Papers.
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