Scandinavian Working Papers in Economics
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Bank of Finland Research Discussion Papers, Bank of Finland

No 6/2011:
The euro and corporate financing

Arturo Bris (), Yrjö Koskinen () and Mattias Nilsson ()

Abstract: In this paper we study how the introduction of the euro has affected corporate financing in Europe. We use firm-level data from eleven euro area countries as well as from a control group of five other European countries spanning the years 1991–2006. We show that firms from euro area countries that previously had weak currencies have increased both their equity and their debt financing compared to the control group. We also show that results are stronger for firms that hail from less financially developed euro area countries, and that large firms from industries that are dependent on external financing have increased their debt financing more. These results support the hypothesis that improved access to capital markets in the euro area has enabled increased external financing, especially debt financing

Keywords: euro; external financing; supply of capital; financial development; financial dependence; financial integration; (follow links to similar papers)

JEL-Codes: F33; F36; G32; (follow links to similar papers)

66 pages, March 15, 2011

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