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Firms’ financing conditions before and after the COVID-19 pandemic: a survey-based analysis

Author

Listed:
  • Annalisa Ferrando

    (European Central Bank)

  • Judit Rariga

    (European Central Bank)

Abstract

In this paper we analyze how the economic situation and financing conditions of euro area firms have changed along different crises that hit the euro area in the past 10 years, with a focus on the changes before and after the COVID-19 pandemic. We use the responses of a large sample of euro area firms to a qualitative business survey run on behalf of the European Central Bank/European Commission (Survey on the access to finance of enterprises—SAFE) since 2009. We describe how during the COVID-19 crisis, and despite generally accommodative financing conditions and state aid measures, turnover and profits of firms decreased sharply, having a dampening impact on firms’ employment and investment. As a result, firms’ financial vulnerability peaked during the COVID-19 crisis. Firms were signaling some deterioration in their access to finance as it is the case more recently due to the pass-through of increasing policy rates to the overall corporate financing conditions. We document that a deterioration in financing conditions has an impact on both firm-specific and aggregate growth. Based on firms’ perceptions, we find a link between real decisions of firms (in terms of investment and employment), macroeconomic developments and some key survey-based indicators of financing conditions.

Suggested Citation

  • Annalisa Ferrando & Judit Rariga, 2024. "Firms’ financing conditions before and after the COVID-19 pandemic: a survey-based analysis," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 51(2), pages 239-264, June.
    • Handle: RePEc:spr:epolin:v:51:y:2024:i:2:d:10.1007_s40812-024-00300-9
    DOI: 10.1007/s40812-024-00300-9
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    References listed on IDEAS

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    1. Kon, Y & Storey, D J, 2003. "A Theory of Discouraged Borrowers," Small Business Economics, Springer, vol. 21(1), pages 37-49, August.
    2. Attolini, Carmela & Ferrando, Annalisa & Rariga, Judit, 2024. "Corporate vulnerabilities as reported by firms in the SAFE," Economic Bulletin Boxes, European Central Bank, vol. 1.
    3. Ferrando, Annalisa & Mulier, Klaas, 2022. "The real effects of credit constraints: Evidence from discouraged borrowers," Journal of Corporate Finance, Elsevier, vol. 73(C).
    4. Òscar Jordà, 2005. "Estimation and Inference of Impulse Responses by Local Projections," American Economic Review, American Economic Association, vol. 95(1), pages 161-182, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Financing conditions; Financing constraints; Firm survey data;
    All these keywords.

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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