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

Murillo Campello, Erasmo Giambona, John R. Graham, Campbell R. Harvey

Research output: Contribution to journalReview article

48 Scopus citations

Abstract

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.

Original languageEnglish (US)
Pages (from-to)323-346
Number of pages24
JournalReview of Finance
Volume16
Issue number2
DOIs
StatePublished - Apr 2012

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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