What happens after corporate default? Stylized facts on access to credit

Diana Bonfim*, Daniel A. Dias, Christine Richmond

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

12 Citations (Scopus)


In this paper, we investigate what happens to firms after they default on their bank loans. We approach this question by establishing a set of stylized facts concerning the evolution of corporate default and its resolution, focusing on access to credit after default. Using a unique dataset from Portugal, we observe that half of the corporate default episodes last 5 quarters. Most firms continue to have access to credit immediately after resolving default, though only a minority has access to new loans. Firms have more difficulties in regaining access to credit if they are small, if their default was long and severe, if they borrow from only one bank or if they default with their main lender. Further, half of the defaulting firms record another default in the future. We observe that firms with repeated defaults are, on average, smaller and experience longer and more severe defaults.
Original languageEnglish
Pages (from-to)2007-2025
Number of pages19
JournalJournal of Banking and Finance
Issue number7
Publication statusPublished - 1 Jul 2012
Externally publishedYes


  • Duration analysis
  • Firm access to credit
  • Loan default


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