Access to liquidity and corporate investment in Europe during the financial crisis

Journal Article (Review;Journal)

We use a unique data set to show how firms in Europe used credit lines during the financial crisis. We find that firms with restricted access to credit (small, private, non-investment-grade, and unprofitable) draw more funds from their credit lines during the crisis than their large, public, investment-grade, profitable counterparts. Interest spreads increased (especially in "market-based economies"), but commitment fees remained unchanged. Our findings suggest that credit lines did not dry up during the crisis and provided the liquidity that firms used to cope with this exceptional contraction. In particular, credit lines provided the liquidity companies needed to invest during the crisis.

Full Text

Duke Authors

Cited Authors

  • Campello, M; Giambona, E; Graham, JR; Harvey, CR

Published Date

  • April 1, 2012

Published In

Volume / Issue

  • 16 / 2

Start / End Page

  • 323 - 346

Electronic International Standard Serial Number (EISSN)

  • 1573-692X

International Standard Serial Number (ISSN)

  • 1572-3097

Digital Object Identifier (DOI)

  • 10.1093/rof/rfr030

Citation Source

  • Scopus