Akademik Veri Yönetim Sistemi
Applied Economics, 2026 (SSCI, Scopus)
This study investigates the impact of inflation uncertainty on corporate financing decisions during the unprecedented post-2021 European inflation surge. Using a panel dataset of 892 non-financial firms across 19 developed European countries from 2007 to 2023, we use the GARCH (1,1) model to measure inflation uncertainty. Applying fixed-effects and system GMM estimators, our empirical analysis reveals a robust negative relationship between inflation uncertainty and corporate leverage. We identify specific economic channels that drive this deleveraging behaviour. First, higher inflation uncertainty worsens information asymmetry, leading creditors to demand higher risk premiums or limit credit, consistent with agency theory. Second, short-term debt is significantly more sensitive to inflation risks than long-term debt, supporting a supply-side constraint channel where creditors shorten maturity to mitigate agency risks. Third, our dynamic analysis suggests that the costs of financial distress outweigh the transaction costs of rebalancing; therefore, firms tend to rapidly adjust their leverages to the optimal capital structure. Finally, we show that robust market institutions significantly mitigate adverse financing constraints related to inflation risks. Our findings indicate that inflation uncertainty is a significant determinant of corporate financial policy through distress avoidance and credit supply channels.