How the choice between bank loan and bond issuance affects the resilience of companies during a crisis

Abstract

This thesis aims to examine whether the use of bank loans to finance business activities, as opposed to the issuance of bonds, confers greater resilience to companies during periods of economic crisis, specifically during the subprime mortgage crisis and the Covid-19 crisis. To analyze this relationship, a Difference-in-Differences (DID) model was used, applied to four distinct samples in order to give more robustness to the conclusions. Although a slight statistical significance was detected during the subprime mortgage crisis, the overall results were not sufficiently significant to support the research hypothesis, likely due to the limitations encountered, which made it difficult to completely isolate the "noise" surrounding the relationship between the method of financing and business resilience. Therefore, it cannot be asserted that the use of bank loans is correlated with greater resilience of companies during the economic crises examined.