THE LIQUIDITY CRISIS IN 2008 : A case study of how the financial crisis, in 2008, influenced the liquidity management in Norwegian companies. In cooperation with: Statkraft AS, Orkla ASA, Telia Norge AS and Equinor ASA

Abstract

The economy of the United States of America experienced a longer period of growth and optimism around the millennium. Increased confidence in the financial markets led to low risk aversion by the investors, while the increase grew in line with the rising house prices. In 2008 the bubble exploded, the money market froze and the world stood above one of the most chaotic financial periods since the 1930s. The crisis also affected the markets in Norway; therefore, it is appropriate to study the impact of the financial crisis on the liquidity management of the Norwegian companies. It is this financial area that is largely reflected in the research literature. To study how the financial crisis in 2008 has affected the liquidity management in the Norwegian companies, we have conducted a case study with four Norwegian companies. We chose to use interviews as method in our case study. In this way, we have gained experiences about the impact of the financial crisis on the companies' liquidity funds, financing, risk assessments and changes in how the liquidity management takes place in practice. The case study has revealed several factors that increased the focus of the Norwegian companies after the financial crisis. The analysis shows that the companies experienced more uncertainty compared to the banks, which were considered less solid during the crisis. This resulted in a desire to reduce the bank exposure and diversify the loan sources, and utilizing the internal capital to an even greater extent. Several of the companies initiated projects of the working capital to free up internal capital. The data collection revealed that the companies wanted to secure a buffer in case the markets in Norway were shut down. For this reason, several of the companies increased their facilities in the banks as an added security. In this way, the study emphasizes the importance of credit facilities as sources of capital from the banks in crisis such as the financial crisis in 2008.