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The impact of the global financial crisis on firms'capital structure

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  • Demirguc-Kunt,Asli
  • Martinez Peria,Maria Soledad
  • Tressel,Thierry

Abstract

Using a data set covering about 277,000 firms across 79 countries over the period 2004-11, this paper examines the evolution of firms'capital structure during the global financial crisis and its aftermath in 2010-11. The study finds that firm leverage and debt maturity declined in advanced economies and developing countries, even in countries that did not experience a crisis. The deleveraging and maturity reduction were particularly significant for privately held firms, including small and medium enterprises. For small and medium-size enterprises, these effects were larger in countries with less efficient legal systems, weaker information-sharing mechanisms, shallower banking systems, and more restrictions on bank entry. In contrast, there is weaker evidence of a significant decline of leverage and debt maturity among firms listed on a stock exchange, which are typically much larger than other firms and likely benefit from the"spare tire"of easier access to capital market financing.

Suggested Citation

  • Demirguc-Kunt,Asli & Martinez Peria,Maria Soledad & Tressel,Thierry, 2015. "The impact of the global financial crisis on firms'capital structure," Policy Research Working Paper Series 7522, The World Bank.
  • Handle: RePEc:wbk:wbrwps:7522
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    References listed on IDEAS

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    1. Tatiana Didier & Ross Levine & Sergio L. Schmukler, 2014. "Capital Market Financing, Firm Growth, Firm Size Distribution," NBER Working Papers 20336, National Bureau of Economic Research, Inc.
    2. Hart, Oliver & Moore, John, 1995. "Debt and Seniority: An Analysis of the Role of Hard Claims in Constraining Management," American Economic Review, American Economic Association, vol. 85(3), pages 567-585, June.
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    1. repec:isp:journl:v:11:y:2017:i:1:p:481-498 is not listed on IDEAS
    2. repec:eee:corfin:v:48:y:2018:i:c:p:122-147 is not listed on IDEAS

    More about this item

    Keywords

    Access to Finance; Economic Theory&Research; Bankruptcy and Resolution of Financial Distress; Debt Markets; Emerging Markets;

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