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RAPPORT

Assets and liabilities of Dutch non-financial firms

Are there financial fragilities in Dutch non-financial firms?

The main purpose of this document is to analyse financial fragilities in Dutch non- financial firms, and in particular, to address policy concerns from different ministries (i.e. Economic affairs, Social affairs and employment, Finance). After consultations with these ministries, two main research questions were determined:

1. Are there financial fragilities in Dutch non-financial firms?

2. If so, in which particular type of firms?

The first question is complemented by the request for a broad overview on the balance sheet position of Dutch NFCs. The main concern is that the debt-to-GDP levels of non-financial firms are relatively high in the Netherlands and have been rising in the last years: from 106% in 2008 to 117% in 2015.

The second question relates to the need to look beyond averages and account for the heterogeneity of Dutch firms –with respect to size, economic activity and performance– and their particular financial situation. For instance, there are specific concerns regarding the financial situation of small Dutch firms: they face low credit supply growth (CPB, 2016) and a high percentage of loan rejections (Bezemer and Muysken, 2015; ECB, 2016), and significant higher interest rates for successful loan applications (Gelauff et al., 2014). Moreover, the fragile position for the smallest of SMEs (micro-firms) has been already confirmed by previous CPB studies (CPB, 2014; Van Veldhuizen and Van Beers, 2014).

On the other hand, the Netherlands has a sizeable current account surplus that is driven by the increase of net foreign assets by non-financial firms (cf. Jansen and Rojas-Romagosa, 2015; Rojas-Romagosa and Van der Horst, 2015). This points to a strong financial position by Dutch firms that seems to contradict the increase in debt- to-GDP levels and the financial concerns regarding small firms.

Therefore, to assess the financial situation of Dutch firms and analyse these contradictory results requires an integrated approach where we analyse both firms’ assets and liabilities, and firm heterogeneity. In particular, we combine the equity, assets and liabilities of firms, and look at different dimensions of the firms: size (small, medium, large), performance by quartile, and sectoral data. We use a set of financial indicators and the Dutch averages (by dimension) to compare its performance with respect to other EU-countries as a benchmark. Moreover, we look at average performance but also at firm heterogeneity and we try to identify which firm-types are vulnerable (by size, sector and performance level).

This analysis builds on previous CPB work (Jansen and Ligthart, 2014; CPB, 2014), and we employ two firm-level databases (BACH and Amadeus) to analyse the financial position of Dutch firms using a combination of different financial indicators. We construct and analyse four different financial indicators (debt ratios, solvency, liquidity and profitability) using the BACH and Amadeus firm-level databases. The BACH database compiles and harmonises firm-level databases for different EU countries and allows for international comparisons of different financial indicators by economic sectors and firm-size. However, the BACH database only provides aggregated indicators (mean and quartile data) and it is not possible to access the underlying firm-level data. Therefore, we complement the analysis by using the Amadeus database, for which we can wrk directly with the firm-level data. 

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