Working Papers present research work by both Danmarks Nationalbank’s employees and our partners. Working Papers are primarily targeted at professionals and people with an interest in central banking research as well as economics and finance in a broader sense.

The financing of Danish corporations in a macroeconomic perspective

Danish non-financial corporations to a large extent finance their non-financial investments internally. During a business cycle expansion the analysis indicates, that corporations firstly finance themselves internally. Hereafter more expensive external financing is applied. The costs of equity financing are normally higher than debt financing. However, for listed companies the results are consistent with a pattern where equity financing precede debt financing during an economic expansion. This is related to the fact that the cost of equity financing tend to fall at times of a rising stock market as it is typically the case already in the early phase of an expansion. Non-financial corporations normally increase short-term borrowing outside the banks in the early phase of an economic downturn. (Only in Danish)