Giada Durante
- 16 February 2023
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 1, 2023Details
- Abstract
- Using firm-level data from the Survey on the Access to Finance of Enterprises (SAFE), this box investigates whether bond-issuing firms substitute bond issuance with bank loans as bond market conditions deteriorate, and whether this affects bank lending conditions for SMEs that do not rely on bond financing. In the latest round of the SAFE, euro area firms reported a widening of their corporate bond financing gap (the difference between the change in the need for and the change in the availability of corporate bond financing). As bond issuers are typically large firms that rely on multiple sources of finance, their substitution of bond issuance with bank loans could lead to a tightening of bank lending conditions for smaller firms. This box finds evidence that bond-issuing firms substitute bond issuance with bank loans when bond market conditions deteriorate. In addition, there is some indication that as corporate bond financing gaps widen, bank lending conditions deteriorate for SMEs that do not use bond financing.
- JEL Code
- D22 : Microeconomics→Production and Organizations→Firm Behavior: Empirical Analysis
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
- 12 January 2023
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 8, 2022Details
- Abstract
- This box looks at the link between firms’ financing conditions and the euro area business cycle. For information on financing conditions of firms, the box uses results from the Survey on the Access to Finance of Enterprises (SAFE). Monetary policy is shown to affect changes in firms’ financing gaps – the difference between the change in demand for and the change in the availability of external financing – as well as their expectations about future availability of finance. At the current juncture, firms report increasing financing gaps and a deterioration in their expectations about the availability of finance in the period ahead. Such responses from firms are associated with stronger concerns about finance at the firm level. Moreover, financing conditions matter for the aggregate business cycle: increasing financing gaps and lower expected availability of finance foreshadow lower GDP growth.
- JEL Code
- D22 : Microeconomics→Production and Organizations→Firm Behavior: Empirical Analysis
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy