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The article explores the extraordinary resilience of the Polish economy to the implications of the global financial crisis despite Poland’s strong integration with other economies. The authors hypothesize that one of the key reasons for this resilience is a low reliance on credit among Polish firms and their low use of financial leverage. To validate their hypothesis, the authors use both macroeconomic data (reflecting the role of credit in company balance sheets) and data from surveys carried out annually on a representative sample of companies by Poland’s Central Statistical Office (GUS) and the country’s central bank, the National Bank of Poland (NBP). The research shows that many firms decide against using credit at all if possible. Interestingly, the authors say, not only companies with a poor financial standing and those whose loan applications have been turned down follow this policy. Generally, Polish companies have been doing relatively well financially in recent years, the authors note, so their limited use of leverage is the result of a conscious choice rather than necessity, especially in the case of companies in relatively good shape. This is in line with the “pecking order” theory under which companies tend to obtain financing from sources that are readily available and then steadily move on to sources that may be more difficult to utilize. This means that a company is likely to make use of its internal resources first. Such a model of financing results in the relative resistance of Polish firms to any periodic tightening in bank lending policies and, consequently, in their greater resilience to the financial crisis, Boguszewski and Lissowska say.

Low Reliance on Credit Among Polish Firms: A Blessing in Disguise at a Time of Financial Crisis?