THE IMPACT OF THE 2008-2009 GLOBAL CRISIS ON RETAILERS’ AND CORE INDUSTRY FIRMS’ BANKING RELATIONSHIPS

Abstract

In this study, we examine how retailers and core industry firms changed their banking relationships after the global crisis in 2008-2009. We use the BEEPS IV and BEEPS V (i.e. Business Environment and Enterprise Performance Survey) surveys to compare the pre- and post-crisis periods. Our results show that while there was no significant change with respect to retailers’ use of checking or savings accounts, the core industry firms increased their use of these accounts. We also find that fewer firms in both groups had an overdraft facility or a line of credit or loan post-crisis, when compared to the pre-crisis period. Our results also show that, while there was no significant change in the type of the financial institution that a core firm deals with post-crisis, for retailers, it was a different story. Post-crisis, a higher percentage of retailers borrowed from a private commercial bank and a lower percentage borrowed from a state-owned bank/agency or from a non-bank financial institution. Overall, we conclude that, access to finance was harder for both groups in the region post-crisis (i.e. both overdraft facilities and lines of credit or loans went down). Also, post-crisis, more of the retailers were forced to borrow from a private commercial bank rather than a state-owned bank/agency or a non-bank institution.

Keywords

• : loan
• line of credit
• overdraft
• retailers
• global crisis
• eastern europe
• central asia