Credit Constraints, Heterogeneous Firms and Loan Defaults
In light of the recent financial and economic crisis the present paper analyzes
the determinants of loan default. We employ a unique firm-level panel data
of 700 bank loans given to small and medium sized enterprises in Slovakia
between 2000 and 2005 to investigate three loan default hypotheses. Testing
the Sector-Risk Hypothesis, we find that agri-food industry does not exhibit
a higher default rate than other sectors. Testing the Firm-Risk Hypothesis,
we find that highly indebted firms are more likely to default on their loan
than other firms. Testing the EU Subsidy Hypothesis we find that the newly
introduced subsidy system, which is decoupled from production, provides a
secure source of income and hence reduces the probability of loan default.
FIDRMUC Jarko;
CIAIAN Pavel;
KANCS D'Artis;
POKRIVCAK Jan;
2013-12-11
WUHAN UNIV JOURNALS PRESS
JRC85954
1529-7373,
http://down.aefweb.net/AefArticles/aef140103Fidrmuc.pdf,
https://publications.jrc.ec.europa.eu/repository/handle/JRC85954,
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