Corporate Finance and Economic Activity in the Euro Area: Structural Issues Report 2013

This report analyses and reviews the corporate finance structure of non-financial corporations (NFCs) in the euro area, including how they interact with the macroeconomic environment. Special emphasis is placed on the crisis that began in 2007-08, thus underlining the relevance of financing and credit conditions to investment and economic activity in turbulent times. When approaching such a broad topic, a number of key questions arise. How did the corporate sector’s capital structure, internal and external financing sources, and its tendency to leverage, evolve in the euro area over the last decade and in the run-up to the financial crisis in particular? Did these developments contribute to and/or exacerbate the financial crisis? Did the corporate sector’s response to various shocks and vulnerabilities support or encumber the euro area economy, both during the financial crisis and in its aftermath?