CBA Analysis no. 55

Do creditworthy enterprises face financial constraints? Research into this problem is based upon a variable sample of more than 3 500 companies spanning from the third quarter of 2008 till the second quarter of 2015. A panel regression analysis controls for characteristics of companies and industries. It is expected that companies with lower creditworthiness face financial constraints. The aim of the research is to find out whether creditworthy companies face the same type of financial constraints (the so-called structural, additional or systemic constraints). The results show that additional financial constraints were active during the crisis, but weakened or disappeared after 2013. In the period of active constraints, changes in deposit interest rates, i.e. exogenous shocks to costs of financing explain most of the constraint’s strength. 

The analysis also showed a possibility that companies with growing activities and orders face financial constraints. However, company size, capitalization and profits compensate for this effect and substantially reduce the probability of a company facing structural financial constraints. With respect to pre-bankruptcy settlements, the analysis showed that such procedures were applied in companies that were facing financial constraints, which did not lessen the strictness of constraints. For the time being, the analysis did not identify a positive impact of pre-bankruptcy settlement procedures on the removal of financial constraints for larger enterprises. 

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