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Financing Obstacles And Growth: An Analysis For Euro Area Non-Financial Corporations

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Executive Summary

This paper investigates whether financial obstacles, and, more generally, financial pressure faced by firms, significantly affect firm growth. For this purpose, the authors use an unbalanced panel of about 1,000,000 observations for around 155,000 non-financial corporations in five euro area countries. In addition to the balance sheet information in this panel, they also rely on firm-level survey data. In this way they are able to work out a direct measure of the firms' probability of facing financing obstacles. Their results indicate that, though based on few variables, this measure appears to be relevant in explaining firm growth in four out of the five countries considered.

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