Please use this identifier to cite or link to this item:
https://doi.org/10.21256/zhaw-29257| Publication type: | Master thesis |
| Title: | The impact of inflation on corporate financing for non-financial firms in Europe |
| Authors: | Brunner, Pascal |
| Advisors / Reviewers: | Kaya, Orcun |
| DOI: | 10.21256/zhaw-29257 |
| Extent: | 58 |
| Issue Date: | 2023 |
| Publisher / Ed. Institution: | ZHAW Zürcher Hochschule für Angewandte Wissenschaften |
| Publisher / Ed. Institution: | Winterthur |
| Language: | English |
| Subject (DDC): | 332: Financial economics |
| Abstract: | For almost two decades, non-financial companies have substantially increased their issuance of corporate bonds. Although Europe’s refinancing market has always been heavily bank-related compared to the USA, the aggregate market financing in the Euro area has been growing faster than bank lending since 2000. Moreover, this period was characterized by low inflation and corresponding low or negative interest rates. These circumstances considerably impacted corporates' financing behaviour. After this period, inflation increased sharply in Europe, reinstating known economic mechanisms and market dynamics. The present paper examines this relationship of inflation to bank lending and net bond issuance for non-financial corporates in Germany, France, Italy, Spain, and The Netherlands, representing approximately 68 % of the European Union’s Gross Domestic Product. For this purpose, an OLS analysis for various main and country-specific models is performed to provide further insights. Besides inflation, the present paper investigates the impact of additional variables to put the findings into a broader context. Namely, refinancing cost, market volatility, and stock market returns are considered. Next, this set of empirical conclusions is analysed and assessed from an economical perspective. These assessments also include a view of traditional capital theory from an empirical standpoint and additional observations. In conclusion, the paper suggests that rising inflation increases European bank lending. Conversely, net bond issuance appears to be decreasing when inflation rises. The implied impact of inflation on net bond issuance seems more relevant than the impact on bank lending. Furthermore, the paper implies that refinancing cost might be a more suitable variable to estimate future developments. Moreover, the report suspects a link between the statistical significance of inflation regarding net bond issuance with the respective maturity of the examined bond market in a country. In addition, the paper implies weak statistical significance for models with smaller bank loans (EUR >1m), while models considering larger bank loans appear more robust. Finally, the author states that the outlined dynamics might pose a risk to financial markets as larger corporations could crowd out smaller firms by shifting their financing to committed credit lines in times of uncertainty. |
| URI: | https://digitalcollection.zhaw.ch/handle/11475/29257 |
| License (according to publishing contract): | CC BY-NC-ND 4.0: Attribution - Non commercial - No derivatives 4.0 International |
| Departement: | School of Management and Law |
| Appears in collections: | MSc Banking and Finance |
Files in This Item:
| File | Description | Size | Format | |
|---|---|---|---|---|
| 2023_Brunner_Pascal_MSc_BF.pdf | 7.06 MB | Adobe PDF |  View/Open |
Show full item record
Brunner, P. (2023). The impact of inflation on corporate financing for non-financial firms in Europe [Master’s thesis, ZHAW Zürcher Hochschule für Angewandte Wissenschaften]. https://doi.org/10.21256/zhaw-29257
Brunner, P. (2023) The impact of inflation on corporate financing for non-financial firms in Europe. Master’s thesis. ZHAW Zürcher Hochschule für Angewandte Wissenschaften. Available at: https://doi.org/10.21256/zhaw-29257.
P. Brunner, “The impact of inflation on corporate financing for non-financial firms in Europe,” Master’s thesis, ZHAW Zürcher Hochschule für Angewandte Wissenschaften, Winterthur, 2023. doi: 10.21256/zhaw-29257.
BRUNNER, Pascal, 2023. The impact of inflation on corporate financing for non-financial firms in Europe. Master’s thesis. Winterthur: ZHAW Zürcher Hochschule für Angewandte Wissenschaften
Brunner, Pascal. 2023. “The Impact of Inflation on Corporate Financing for Non-Financial Firms in Europe.” Master’s thesis, Winterthur: ZHAW Zürcher Hochschule für Angewandte Wissenschaften. https://doi.org/10.21256/zhaw-29257.
Brunner, Pascal. The Impact of Inflation on Corporate Financing for Non-Financial Firms in Europe. ZHAW Zürcher Hochschule für Angewandte Wissenschaften, 2023, https://doi.org/10.21256/zhaw-29257.
Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.