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SME Recovery Following a Financial Crisis: Does Debt Overhang Matter?. ESRI WP491. September 2014

Lawless, Martina and O'Connell, Brian and O'Toole, Conor (2014) SME Recovery Following a Financial Crisis: Does Debt Overhang Matter?. ESRI WP491. September 2014. [Working Paper]

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    Abstract

    The years before the financial crisis saw a dramatic build-up in private debt levels in several countries and this increase was particularly marked in Ireland. In this paper, we look at whether outstanding debt taken out by small and medium sized enterprises in Ireland constrains current performance. We find that the level of debt is generally associated with positive firm performance, facilitating growth and investment. Higher debt burdens (measured as the ratio of debt to turnover), on the other hand, have significant negative effects on all measures of firm performance, in particular investment, employment and indicators of financial distress.

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    Item Type: Working Paper
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > industrial policy
    Countries > Ireland
    EU policies and themes > Policies & related activities > economic and financial affairs > financial crisis 2008-on/reforms/economic governance
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Economic and Social Research Institute (ESRI), Dublin > ESRI Working Papers
    Depositing User: Alyssa McDonald
    Official EU Document: No
    Language: English
    Date Deposited: 13 Jul 2017 15:19
    Number of Pages: 28
    Last Modified: 13 Jul 2017 15:19
    URI: http://aei.pitt.edu/id/eprint/88103

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