In this way, by comparing firms from the same branch, we minimize those differences that might arise due to sector-specific features. If, moreover, we compare firms of the same size, those differences that might arise from having more or less access to markets are also reduced.
The remaining differential should be attributable to differences in management ability or other specific circumstances. This kind of analysis has been carried out in a recent study 1 whose key findings we summarise here. Firstly, the analysis shows how large and small firms do, in fact, behave very differently.
Their debt ratios are highly disparate, although which type of company has a larger level of debt depends on the branch of activity. The second of the findings comes from comparing the debt levels of Spanish firms with the average levels for the main countries in the euro area, within each branch of activity and company size. The graph below shows that, in , large Spanish firms were on average more heavily indebted when compared with their European peers than small firms. In addition, for a high proportion of these overly indebted sectors, their relative debt has become more acute since either because their leverage has increased or because their debt has fallen less than in other countries.
Lastly, the analysis shows how the lower relative debt of small firms seems to result from their greater effort to reduce this debt since the end of We could conclude that, given the lower interest rates during , the greater financial burden for small firms reflects a larger drop in their earnings.
Given this situation, these firms probably tried to reduce their reliance on external funds, concentrating on meeting their debt commitments that were consuming a large proportion of their earnings. Similarly, this fall in earnings would also increase the risk perceived by creditors that these firms would not be able to meet their debts.
This makes it difficult to renew short-term credit and accentuates the deleveraging process, particularly within a context of less appetite for risk. In line with this situation, the data show how indebtedness has tended to fall further in those sectors whose over-indebtedness with respect the European average was larger in In short, although the aggregate data show a proportion of external funds on the balance sheets of Spanish firms that is similar to other countries, a breakdown by sector reveals the need for adjustment in many of them.
This adjustment has already started and has been particularly acute in small firms, although there are still numerous sectors with excessive debt. Already a user? Summary Forecast Stats Download. This page provides - Spain Government Debt To GDP - actual values, historical data, forecast, chart, statistics, economic calendar and news.
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Financial markets. Monetary policy. Public sector. Ricard Murillo Gili. June 11th, Download File. In this article. Government debt. Long-term trends. Macrofinance What factors will determine the evolution of interest rates, investment sentiment and macro-financial conditions in general?
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