Abstract
The aim of our research is to investigate the impact of employment protection legislation on the firms’ credit access. This research is the first to address this topic by examining the impact of hiring and dismissal regulations on the probability to be denied credit or to be discouraged from applying for a loan in twelve EU countries. We find that greater flexibility in hiring employees and in structuring their working hours reduces the probability that the firm is credit constrained. In addition, we find that whereas banks facilitate credit access in contexts in which the dismissal procedures allow for the protection of the firms’ knowledge, firms tend to be discouraged from applying for a loan if a dismissal entails financial consequences. Our results are robust to selection bias as well as to alternative econometric approaches.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
