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on Corporate Finance |
| By: | De Haas, Ralph; González-Uribe, Juanita |
| Abstract: | We review the literature on the effectiveness of public policies to facilitate firms’ access to finance. The rationale for such policies is to address market failures that cause financial constraints. Using a simple taxonomy, we discuss the current evidence on common interventions to tackle these constraints: public lending through state and development banks, public lending through private banks, subsidized credit, credit guarantee schemes, export credit agencies, publicly backed venture capital, and tax incentives for equity investors. Based on the quantity and quality of the available evidence, we summarize the policies that have proven most effective in helping firms access external financing. In addition, we highlight areas where future research is needed to address current knowledge gaps and to provide more definitive policy guidance. |
| Keywords: | entrepreneurship; small business finance; public policy; financial constraints |
| JEL: | G20 G28 H25 H81 |
| Date: | 2025–08–06 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129139 |
| By: | Siavash Mohades; Giulia Piccillo; Maria Savona; Tania Treibich |
| Abstract: | This paper studies the role of capacity utilisation in explaining investment behaviour in Italian SMEs and large firms. We propose a framework in which firms with high capacity utilisation are more likely to invest in maintaining a buffer against future shocks. Using firm-level data from the Bank of Italy’s Survey of Industrial and Service Firms (2002–2024), we empirically examine how deviations from a sector-specific target capacity utilisation influence investment decisions, accounting for the roles of uncertainty and financial constraints. Our findings reveal that Italian firms with high growth potential- those at the so-called “growth window” (Coad et al., 2021)- are more likely to invest. This result is primarily driven by large firms, while SMEs do not seem to respond strongly to the presence in such growth windows. Furthermore, we find that uncertainty does not deter investment among firms operating at high capacity, but instead stimulates investment in firms with low capacity utilisation. These insights have significant implications for industrial policy that targets support to firms at critical decision points in their growth trajectory. |
| Keywords: | capacity utilisation, investment, uncertainty, financial constraints, firm growth |
| JEL: | D20 D22 D24 D81 E32 L11 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12108 |
| By: | Yasuhiro ARIKAWA; Hideaki MIYAJIMA; Takuji SAITO |
| Abstract: | This paper examines the evolution of corporate governance systems in Japanese firms in the 21st century. It highlights the current state of governance, focusing on external mechanisms such as bank–firm relationships and ownership structures, as well as internal mechanisms including board composition and CEO compensation. It also reviews organizational architecture, with particular attention to the employment system. The analysis considers the role of corporate governance reforms in shaping these systems. We then assess whether these reforms have effectively altered corporate behavior and/or improved firm performance. Finally, we evaluate the extent to which the reforms have contributed to advancements in ESG practices. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:eti:polidp:25014 |
| By: | Kerola, Eeva; Norring, Anni |
| Abstract: | We use confidential loan-level data from the European Central Bank to investigate how changes in the countercyclical capital buffer requirement in Germany affect lending to firms. We find evidence showing that tightening the countercyclical capital buffer leads German banks to reduce the volume of corporate loans and increase the price of new loans. These effects take place immediately after the announcement, given 12 months before the change was implemented. Importantly, we find that the reduction in credit availability notably affects small and medium-sized enterprises, which experience both a significant decrease in available credit and an increase in credit costs. In contrast, large firms are not affected. |
| Keywords: | Macroprudential policy, Countercyclical capital buffer, Loan level data |
| JEL: | E58 G21 G28 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bofrdp:325482 |
| By: | Rossmann, Felix; Greitens, Jan; Knoll, Lisa |
| Abstract: | Sustainable finance regulations and initiatives across Europe have predominantly targeted large corporations, while small and medium-sized enterprises (SMEs) are increasingly drawn into the framework, often facing challenges such as resource constraints and complex documentation requirements. To capture the dynamics of this field, a European survey conducted in 2025 with responses mainly from German and Austrian companies examined SME engagement with sustainable finance. The findings show a rising share of SMEs investing in sustainability in comparison to the preceding study in 2023, with internal funding as the dominant source. Where external financing is used, it is primarily activated on publicly supported bank loans, whereas capital markets remain largely irrelevant for SMEs. While a connection between sustainability data collection and sustainable investment exists, many SMEs invest without systematically collecting data. These results highlight the continued centrality of traditional banking relationships as the main external financing channel for SMEs, which could serve to enable and facilitate capital flows toward sustainability rather than prescribe or direct them. |
| Keywords: | Sustainable Finance, Small and Medium-sized Enterprises, Sustainability Investment, Sustainability Reporting, Bank Financing |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cfswop:325834 |
| By: | Tsz Chun Kwok; Daniel Spiro; Arthur A. van Benthem |
| Abstract: | We provide a theoretical micro foundation for how much pollution (negative externalities) a firm will internalize based on the ownership distribution of its shareholders. Small shareholders, compared to large ones, want the firm to spend more on avoiding pollution since they suffer less profit loss for the same environmental benefit. In particular, if a shareholder holds a share of 1/N, where N is the population in society, that shareholder's preferences align with a social planner's. Three theoretical predictions arise. First, small shareholders will systematically vote for a greener corporate profile. Second, firms with a smaller weighted median shareholder will pollute less. Third, countries with concentrated corporate wealth holdings and/or more individualized firm ownership pollute more. This implies that standard models of externalities in environmental economics and macroeconomics containing representative agents are either internally inconsistent or not fully specified. |
| Keywords: | firm ownership, shareholders, voting, pollution |
| JEL: | Q50 Q52 G32 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12096 |
| By: | Klaus Abberger; Alexander Rathke; Samad Sarferaz; Pascal Seiler |
| Abstract: | We study the investment channel of monetary policy through a randomized survey experiment, exposing Swiss firms directly to shocks to the Swiss National Bank's policy rate. Our survey experiment randomizes pure policy-rate shocks - uncontaminated by information effects - and records firms' revisions to investment plans and financing choices. We find pronounced asymmetry: firms respond strongly to unanticipated rate hikes but only moderately to equivalent cuts. This asymmetry varies with firm size, sector, export intensity, and investment types. Investment financing shapes the response: reliance on internal funds and being financially unconstrained amplifies investment sensitivity. |
| Keywords: | monetary policy, investment, firm heterogeneity, survey experiment, external finance, randomized control trial |
| JEL: | E22 E52 C93 G32 D22 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12099 |
| By: | Tsz Chun Kwok; Daniel Spiro; Arthur A. van Benthem |
| Abstract: | We provide a theoretical micro foundation for how much pollution (negative externalities) a firm will internalize based on the ownership distribution of its shareholders. Small shareholders, compared to large ones, want the firm to spend more on avoiding pollution since they suffer less profit loss for the same environmental benefit. In particular, if a shareholder holds a share of 1/N, where N is the population in society, that shareholder's preferences align with a social planner's. Three theoretical predictions arise. First, small shareholders will systematically vote for a greener corporate profile. Second, firms with a smaller weighted median shareholder will pollute less. Third, countries with concentrated corporate wealth holdings and/or more individualized firm ownership pollute more. This implies that standard models of externalities in environmental economics and macroeconomics containing representative agents are either internally inconsistent or not fully specified. |
| JEL: | G32 Q50 Q52 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34203 |
| By: | Aniket Baksy; Daniele Caratelli; Luke M. Olson |
| Abstract: | Cyber risk analysis reveals that mid-size firms face the highest vulnerability while small firms are less targeted and large firms are well-defended. |
| Date: | 2025–09–18 |
| URL: | https://d.repec.org/n?u=RePEc:ofr:ofrblg:25-12 |
| By: | Beyene, Winta; Delis, Manthos D.; de Greiff, Kathrin; Ongena, Steven |
| Abstract: | What role does bond versus bank debt play in the climate transition? We document that fossil fuel firms with greater stranded-asset risk rely less on bond finance and more on bank credit. While bond investors price stranding risk, banks in the syndicated loan market do not. This differential pricing leads to within-firm substitution from bonds to loans, consistent with a relative contraction in bond market credit supply. We also find that large banks are more likely to lend to risk-exposed firms, raising questions about how climate risk is distributed and whether credit flows align with transition objectives. |
| Keywords: | Financial Intermediation, Climate Finance, Stranded-Asset Risk |
| JEL: | G21 G28 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:safewp:325485 |
| By: | Almeida, Teresa; Dayan, Yehuda; Krause, Helen; Lordan, Grace; Theodoulou, Andreas |
| Abstract: | Diversity, equity and inclusion (DEI) is a growing strategic focus area. However, measuring DEI remains a challenge, partly due to self-reporting biases and limitations of cross-sectional survey data. This paper proposes a novel measure of DEI using a data set of online employee reviews that encompasses more than 3.2 million reviews posted between 2015 and 2022 on the career intelligence website Glassdoor. We investigate the relationship between this measure of DEI and firm performance for 945 US and UK-listed firms. We find that DEI is associated with higher long-term market performance, with positive impacts larger for growth compared to steady state firms, but not short-term market performance. We find evidence of a mixed relationship between DEI and accounting performance, and a consistent positive relationship with higher innovation. Finally, we examine the interaction between firm DEI and senior management diversity, with results indicating that the positive effects of DEI on long-term market performance and innovation are amplified in firms with higher levels of ethnic diversity in senior management. Overall, we conclude that DEI has either a positive or neutral association with firm performance. |
| JEL: | L81 R14 J01 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129444 |
| By: | Andreas Dibiasi; Katharina Erhardt |
| Abstract: | This paper studies heterogeneous firm responses to a sudden trade-induced profitability shock -- the 2015 Swiss franc appreciation. Using firm-level investment data and a novel measure of exposure, we document that this trade shock causes large and persistent investment declines among affected firms. Examining heterogeneous responses among firms with similar exposure, we find that differences in responsiveness are not explained by economic fundamentals but are strongly linked to firm age and managerial experience. Younger firms and those led by less experienced managers react substantially more strongly. We argue that these empirical patterns are consistent with a model of Bayesian learning, in which firms update their beliefs about profitability over time. The results provide important insights into the long-lasting effects of trade shocks on business dynamism, capital investment, and local employment. |
| Keywords: | trade shocks, firm-level investment, exchange rate shocks |
| JEL: | F14 D22 G31 L25 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12098 |