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- W4313478892 abstract "In this study, we focus on the effect of commodity price uncertainty on the cost of bank credit for a broad sample of loans traced to firms operating in developing and advanced economies. Using loan-level data for the 1990–2019 period, we find novel evidence that commodity price uncertainty, as estimated by a Bayesian Dynamic Factor Model, increases the cost of bank loans particularly for commodity dependent firms operating in developing countries vis-à-vis commodity dependent firms operating in advanced economies. In a further analysis, when examining the effect of group specific commodity price uncertainty on cost of borrowing, we find that agricultural price uncertainty significantly increases the cost of credit of commodity dependent firms operating in developing economies. We also find that commodity price uncertainty rises the cost of bank credit more for loans traced to firms locating in bank-based countries as compared to loans granted to firms operating in market-based economies, suggesting that the financial structure of a country could play an important role in passing through the borrowing costs to firms. Lastly, we also find that the effect of commodity price uncertainty is more pronounced for smaller firms operating in developing countries as opposed to smaller firms operating in developed countries. All in all, the above evidence provides useful policy implications, particularly, for the longevity of corporate sector operating in developing countries whereby the local financial structure poses serious threats to firms’ future earnings." @default.
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- W4313478892 date "2023-03-01" @default.
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- W4313478892 title "Does commodity price uncertainty matter for the cost of credit? Evidence from developing and advanced economies" @default.
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- W4313478892 doi "https://doi.org/10.1016/j.jcomm.2022.100306" @default.
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