EIB Working Papers 2018/08 - Debt overhang and investment efficiency
EIB Working Papers 2018/08 - Debt overhang and investment efficiency

Author: European Investment Bank

Publisher: European Investment Bank

Published: 2019-04-29

Total Pages: 56

ISBN-13: 9286140576

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Using a pan-European data set of 8.5 million firms, this paper finds that firms with high debt overhang invest relatively more than otherwise similar firms if they are operating in sectors facing good global growth opportunities. At the same time, the positive impact of a marginal increase in debt on investment efficiency disappears if firm debt is already excessive, if it is dominated by short maturities, and during systemic banking crises. The results are consistent with theories of the disciplining role of debt, as well as with models highlighting the negative link between agency problems at firms and banks and investment efficiency.

Debt Overhang and Investment Efficiency
Debt Overhang and Investment Efficiency

Author: Francesca Barbiero

Publisher:

Published: 2018

Total Pages: 45

ISBN-13:

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Using a pan-European dataset of 8.5 million rms, we nd that rms with high debt overhang invest relatively more than otherwise similar rms if they are operating in sectors facing good global growth opportunities. This eect is robust to controlling for rm xed eects and for country-sector-time xed eects. At the same time, the positive impact of a marginal increase in debt on investment eciency disappears if rm debt is excessive, if it is dominated by short maturities, and during systemic banking crises. Our results are consistent with theories highlighting the disciplining role of debt over equity.

EIB Working Paper 2020/09 - Investment Vs Debt Trade-offs in the Post-COVID-19 European Economy
EIB Working Paper 2020/09 - Investment Vs Debt Trade-offs in the Post-COVID-19 European Economy

Author: Rozália Pál

Publisher:

Published: 2020

Total Pages:

ISBN-13:

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This paper estimates the revenues lost by European firms during the COVID-19 crisis, taking into account different scenarios regarding policy support and the length of the crisis. It examines the likely effect of such revenue losses on firms' internal financing capacity and on investment, suggesting that the COVID-19 crisis may trigger an fall in corporate investment greater that that experienced during the Great Financial Crisis, with firms facing a trade-off between reduced investment and greater indebtedness. A macro-model based on historical data also suggests that the decline in corporate investment would likely be within the computed ranges, should the estimated gap in firm revenues materialise as the result of the crisis.

Investment Vs Debt Trade-offs in the Post-COVID-19 European Economy
Investment Vs Debt Trade-offs in the Post-COVID-19 European Economy

Author:

Publisher:

Published: 2020

Total Pages:

ISBN-13: 9789286148507

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This paper estimates the revenues lost by European firms during the COVID-19 crisis, taking into account different scenarios regarding policy support and the length of the crisis. It examines the likely effect of such revenue losses on firms' internal financing capacity and on investment, suggesting that the COVID-19 crisis may trigger an fall in corporate investment greater that that experienced during the Great Financial Crisis, with firms facing a trade-off between reduced investment and greater indebtedness. A macro-model based on historical data also suggests that the decline in corporate investment would likely be within the computed ranges, should the estimated gap in firm revenues materialise as the result of the crisis.

Finance and Investment
Finance and Investment

Author: Colin P. Mayer

Publisher: Oxford University Press

Published: 2018

Total Pages: 425

ISBN-13: 0198815816

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Low growth, low investment, insufficient spend on infrastructure, weak bank lending to the corporate sector, and funding deficiencies of small and medium-sized enterprises are all causes of concern in Europe. To many, they point to fundamental problems in the financing of European companies and in Europe's financial systems. Are these concerns valid and do the structure and performance of the financial system lie at their heart? If so, what should be done to address them, and have the right policy prescriptions been identified to date? A product of the Restarting European Investment Finance research programme, Finance and Investment: The European Case brings together leading researchers to consider the causes of the persistently low level of investment in Europe. It examines the extent to which the financial system is a contributory factor and identifies possible remedies, considering the relation of finance to corporate sector investment, the lending behaviour of banks, the provision of equity financing, and the role of public sector institutions, regulation, and taxation. Finance and Investment provides one of the most comprehensive and thorough analyses of any financial system undertaken to date. It reflects a large body of research using new and existing data sets, employing advanced empirical tools, and exploiting the unique insights provided by the tumultuous events of financial and sovereign debt crises. Together, they comprise an exceptional body of knowledge to advance academic thinking and guide policy formulation.

A Strategy for Resolving Europe's Problem Loans
A Strategy for Resolving Europe's Problem Loans

Author: Mr.Shekhar Aiyar

Publisher: International Monetary Fund

Published: 2015-09-24

Total Pages: 79

ISBN-13: 1513511653

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Europe’s banking system is weighed down by high levels of non-performing loans (NPLs), which are holding down credit growth and economic activity. This discussion note uses a new survey of European country authorities and banks to examine the structural obstacles that discourage banks from addressing their problem loans. A three pillared strategy is advocated to remedy the situation, comprising: (i) tightened supervisory policies, (ii) insolvency reforms, and (iii) the development of distressed debt markets.

EIB Investment Report 2020/2021
EIB Investment Report 2020/2021

Author: European Investment Bank

Publisher: European Investment Bank

Published: 2021-02-04

Total Pages: 591

ISBN-13: 9286148127

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The Europe Union's massive efforts to rebuild after the coronavirus pandemic present a unique opportunity to transform its economy, making it more green and digital – and ultimately more competitive. The Investment Report 2020-2021 looks at the toll the pandemic took on European firms' investment and future plans, as well as their efforts to meet the demands of climate change and the digital revolution. The report's analysis is based on a unique set of databases and data from a survey of 12 500 firms conducted in the summer of 2020, in the midst of the COVID-19 crisis. While providing a snapshot of the heavy toll the pandemic took on some forms of investment, the report also offers hope by pointing out the economic areas in which Europe remains strong, such as technologies that combine green and digital innovation.

Project Finance in Europe
Project Finance in Europe

Author: Haydn Shaughnessy

Publisher: Wiley

Published: 1995-04-25

Total Pages: 192

ISBN-13: 9780471943815

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Designed to assist managers in companies of any size to understand the nature of project financing in the new European Community, enabling them to anticipate the requirements of project finance institutions. Coverage includes new sources of project finance, the changing criteria of large project financial organizations, the most popular financing techniques, cross-border projects, Russian privatization, emerging markets and the distribution of resources across the EC. Features numerous case studies of project finance.

EIB Investment Report 2019/2020
EIB Investment Report 2019/2020

Author: European Investment Bank

Publisher: European Investment Bank

Published: 2019-11-26

Total Pages: 634

ISBN-13: 9286144679

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The Investment Report, issued annually by the European Investment Bank, provides a comprehensive overview and analysis of investment and the financing of investment in the European Union. It combines the exploration of investment trends with in-depth analysis, focusing especially on the drivers and barriers to investment activity. The report leverages on a unique set of databases and survey data, including EIBIS, an annual survey of 13 500 firms in Europe, which focuses on their assessment of investment and investment finance conditions, and which allows analysis with firm balance sheet information. The report provides critical inputs to policy debates on the need for public action on investment, and on the types of intervention that can have the greatest impact.

Financial and Legal Constraints to Firm Growth
Financial and Legal Constraints to Firm Growth

Author: Thorsten Beck

Publisher:

Published: 2013

Total Pages:

ISBN-13:

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Using a unique firm-level survey data base, covering fifty four countries, the authors investigate whether different financial, legal, and corruption issues that firms report as constraints, actually affect their growth rates. The results show that the extent to which these factors constrain a firm's growth depends very much on its size, and that it is consistently the smallest firms that are most adversely affected by all these constraints. Firm growth is more affected by reported constraints in countries with underdeveloped financial, and legal systems, and higher corruption. So, policy measures to improve financial, and legal development, and reduce corruption are well justified in promoting firm growth, particularly the development of the small, and medium enterprise sector. But the evidence also shows that the intuitive descriptors of an "efficient" legal system, are not correlated with the components of the general legal constraints that predict firm growth. This finding suggests that the mechanism by which the legal system affects firm performance, is not well understood. The authors' findings also provide evidence that the corruption of bank officials, constraints firm growth. This "institutional failure" should be taken into account, when modeling the monitoring role of financial institutions in overcoming market failures due to informational asymmetries.