Access to capital, investment, and the financial crisis

Kathleen M. Kahle, René M. Stulz

Research output: Contribution to journalArticlepeer-review

310 Scopus citations


During the recent financial crisis, corporate borrowing and capital expenditures fall sharply. Most existing research links the two phenomena by arguing that a shock to bank lending (or, more generally, to the corporate credit supply) caused a reduction in capital expenditures. The economic significance of this causal link is tenuous, as we find that (1) bank-dependent firms do not decrease capital expenditures more than matching firms in the first year of the crisis or in the two quarters after Lehman Brother's bankruptcy; (2) firms that are unlevered before the crisis decrease capital expenditures during the crisis as much as matching firms and, proportionately, more than highly levered firms; (3) the decrease in net debt issuance for bank-dependent firms is not greater than for matching firms; (4) the average cumulative decrease in net equity issuance is more than twice the average decrease in net debt issuance from the start of the crisis through March 2009; and (5) bank-dependent firms hoard cash during the crisis compared with unlevered firms.

Original languageEnglish (US)
Pages (from-to)280-299
Number of pages20
JournalJournal of Financial Economics
Issue number2
StatePublished - Nov 2013


  • Bank relationships
  • Cash holdings
  • Corporate borrowing
  • Corporate investment
  • Credit constraints
  • Credit supply
  • Financial crisis

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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