ABSTRACT
This chapter investigates the relevance of institutional and macroeconomic indicators in assessing firms’ capital structure before and during the crisis. The importance of this study stems from the fact that the risk estimation associated with a firm has been more challenging during the last financial crisis than at any time in recent history. Cluster analysis is employed to find a significant reduction in the use of debt from the pre- to post-2008 period. Among tested variables, after 2008 the level of public debt ratio, national credit laws, and available bank funds significantly impact the use of both bank and bond debt, but the level of aggregated direct foreign investment and high-tech sector size gain significance in their bearing on using bank loans only. The results also present evidence that the design of the national tax system impacts the utilization of bank loans and the national market capitalization ratio has no bearing on the use of debt at all, probably due to the globalization of stock exchanges.
