How Does Long-Term Finance Affect Economic Volatility?
This paper examines how the ability to access long-term debt affects firm-level growth volatility. The analysis finds that firms in industries with stronger preference to use long-term finance relative to short-term finance experience lower growth...
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World Bank, Washington, DC
2016
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| Online Access: | http://documents.worldbank.org/curated/en/2016/01/25801185/long-term-finance-affect-economic-volatility http://hdl.handle.net/10986/23703 |
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okr-10986-237032021-04-23T14:04:16Z How Does Long-Term Finance Affect Economic Volatility? Demirguc-Kunt, Asli Horváth, Bálint L. Huizinga, Harry RISK PROFILES CREDIT MARKETS MONETARY POLICY DEPOSIT LIABILITY CHECKS ACCOUNTING OPTIMAL CONTRACTS DEPOSITS STANDARD DEBT CONTRACTS LIQUIDATION STOCK LOANABLE FUNDS VALUATION DEBTORS INTEREST TRADE CREDITS CREDIT AVAILABILITY GUARANTEES LIQUIDITY RISKS LONG-TERM FINANCE INTEREST RATE PRIVATE CREDIT EXCHANGE STOCK MARKET BANKING SYSTEM AVAILABILITY OF CREDIT LIQUIDITY DEVELOPING COUNTRIES TOTAL DEBT POLITICAL ECONOMY MATURITY STRUCTURE EQUITY SECURITIES POSITIVE COEFFICIENT CAPITAL STRUCTURE MORTGAGE LIQUIDITY RISK DEPOSIT MONEY BANKS BONDS DEBT CONTRACTS BORROWERS BOND FINANCING CREDIT TRANSACTIONS CENTRAL BANKS BANKRUPTCY CREDITORS INTERNATIONAL BANK CASH FLOWS PROVISION OF CREDIT SAFETY NETS CREDIBILITY FINANCIAL FRAGILITY MATURITY EXTERNAL FINANCE SMALL BUSINESS MACROECONOMIC STABILITY LONG-TERM DEBT MARKET DEVELOPMENT LONG- TERM DEBT ENFORCEMENT OF CONTRACTS MORAL HAZARD CONTRACT ENFORCEMENT FINANCIAL STUDIES CREDIT BUREAUS DEBTS CONTRACTS RISK-FREE RETURN LIQUIDITY CONSTRAINTS CASH RESERVES MARKETS DEBT LONG TERM DEBT RETURN DEPOSIT INSURANCE LENDERS BUSINESS CYCLE ACCOUNTS RECEIVABLE LOANS RESERVES BANK CREDIT MONETARY AUTHORITIES LEGAL FRAMEWORK FINANCE BAILOUT EXPENDITURE TRANSACTIONS DEBT FINANCING BANKRUPTCY LAWS EQUITY MACROECONOMIC INSTABILITY DEBT RATIO VALUE OF ASSETS CREDIT CONSTRAINTS ASSET VALUE GOOD DISCLOSURE STANDARDS OWNERSHIP STRUCTURE TRANSPARENCY MARKET CAPITALIZATION MARKET FAILURES MARKET DATA FINANCIAL CRISIS SHORT- TERM DEBT FUTURE RETURNS TREASURY BILLS SHORT-TERM DEBT BOND MARKET CONTRACT CAPITALIZATION REPAYMENT EXPENDITURES CREDIT INFORMATION DEBT SECURITIES LIQUIDITY MANAGEMENT FIRM PERFORMANCE CORPORATE INVESTMENT BALANCE SHEET MARKET MATURITY MATCHING MARKET VALUE SECURITIES TREASURY LONG-TERM INVESTMENTS SHAREHOLDERS MATURITY STRUCTURES INSURANCE BUSINESS CYCLES GOVERNMENT POLICIES ECONOMIC DEVELOPMENT POSITIVE COEFFICIENTS CORPORATE DEBT INVESTOR FIXED ASSETS BANK LOANS FINANCIAL DEVELOPMENT ACCOUNTING STANDARDS FINANCIAL MARKET MACROECONOMIC VOLATILITY INVESTMENT BOND DOMESTIC CREDIT SHARE SAVINGS DEPOSITS INVESTOR PROTECTION COLLATERAL FINANCIAL MARKETS POLITICAL STABILITY COMPETITIVE MARKETS INSTITUTIONAL DEVELOPMENT EXTERNAL DEBT INVESTMENTS LENDING CHECK INTEREST RATE RISK STOCK RETURNS MATURITIES SHORT- TERM FINANCE ASSETS RATIO LIABILITIES BOND MARKET DEVELOPMENT INTERNATIONAL SETTLEMENTS LONG-TERM ASSETS LEGAL RIGHTS CASH FLOW DEVELOPMENT BANK SHORT-TERM FINANCE STOCK MARKETS CREDIT MARKET BANKING MARKET DEBT MATURITY INVESTING This paper examines how the ability to access long-term debt affects firm-level growth volatility. The analysis finds that firms in industries with stronger preference to use long-term finance relative to short-term finance experience lower growth volatility in countries with better-developed financial systems, as these firms may benefit from reduced refinancing risk. Institutions that facilitate the availability of credit information and contract enforcement mitigate the refinancing risk and therefore growth volatility associated with short-term financing. Increased availability of long-term finance reduces growth volatility in crisis as well as non-crisis periods. 2016-02-01T20:42:03Z 2016-02-01T20:42:03Z 2016-01 Working Paper http://documents.worldbank.org/curated/en/2016/01/25801185/long-term-finance-affect-economic-volatility http://hdl.handle.net/10986/23703 English en_US Policy Research Working Paper;No. 7535 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
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Digital Repository |
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Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
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World Bank |
| language |
English en_US |
| topic |
RISK PROFILES CREDIT MARKETS MONETARY POLICY DEPOSIT LIABILITY CHECKS ACCOUNTING OPTIMAL CONTRACTS DEPOSITS STANDARD DEBT CONTRACTS LIQUIDATION STOCK LOANABLE FUNDS VALUATION DEBTORS INTEREST TRADE CREDITS CREDIT AVAILABILITY GUARANTEES LIQUIDITY RISKS LONG-TERM FINANCE INTEREST RATE PRIVATE CREDIT EXCHANGE STOCK MARKET BANKING SYSTEM AVAILABILITY OF CREDIT LIQUIDITY DEVELOPING COUNTRIES TOTAL DEBT POLITICAL ECONOMY MATURITY STRUCTURE EQUITY SECURITIES POSITIVE COEFFICIENT CAPITAL STRUCTURE MORTGAGE LIQUIDITY RISK DEPOSIT MONEY BANKS BONDS DEBT CONTRACTS BORROWERS BOND FINANCING CREDIT TRANSACTIONS CENTRAL BANKS BANKRUPTCY CREDITORS INTERNATIONAL BANK CASH FLOWS PROVISION OF CREDIT SAFETY NETS CREDIBILITY FINANCIAL FRAGILITY MATURITY EXTERNAL FINANCE SMALL BUSINESS MACROECONOMIC STABILITY LONG-TERM DEBT MARKET DEVELOPMENT LONG- TERM DEBT ENFORCEMENT OF CONTRACTS MORAL HAZARD CONTRACT ENFORCEMENT FINANCIAL STUDIES CREDIT BUREAUS DEBTS CONTRACTS RISK-FREE RETURN LIQUIDITY CONSTRAINTS CASH RESERVES MARKETS DEBT LONG TERM DEBT RETURN DEPOSIT INSURANCE LENDERS BUSINESS CYCLE ACCOUNTS RECEIVABLE LOANS RESERVES BANK CREDIT MONETARY AUTHORITIES LEGAL FRAMEWORK FINANCE BAILOUT EXPENDITURE TRANSACTIONS DEBT FINANCING BANKRUPTCY LAWS EQUITY MACROECONOMIC INSTABILITY DEBT RATIO VALUE OF ASSETS CREDIT CONSTRAINTS ASSET VALUE GOOD DISCLOSURE STANDARDS OWNERSHIP STRUCTURE TRANSPARENCY MARKET CAPITALIZATION MARKET FAILURES MARKET DATA FINANCIAL CRISIS SHORT- TERM DEBT FUTURE RETURNS TREASURY BILLS SHORT-TERM DEBT BOND MARKET CONTRACT CAPITALIZATION REPAYMENT EXPENDITURES CREDIT INFORMATION DEBT SECURITIES LIQUIDITY MANAGEMENT FIRM PERFORMANCE CORPORATE INVESTMENT BALANCE SHEET MARKET MATURITY MATCHING MARKET VALUE SECURITIES TREASURY LONG-TERM INVESTMENTS SHAREHOLDERS MATURITY STRUCTURES INSURANCE BUSINESS CYCLES GOVERNMENT POLICIES ECONOMIC DEVELOPMENT POSITIVE COEFFICIENTS CORPORATE DEBT INVESTOR FIXED ASSETS BANK LOANS FINANCIAL DEVELOPMENT ACCOUNTING STANDARDS FINANCIAL MARKET MACROECONOMIC VOLATILITY INVESTMENT BOND DOMESTIC CREDIT SHARE SAVINGS DEPOSITS INVESTOR PROTECTION COLLATERAL FINANCIAL MARKETS POLITICAL STABILITY COMPETITIVE MARKETS INSTITUTIONAL DEVELOPMENT EXTERNAL DEBT INVESTMENTS LENDING CHECK INTEREST RATE RISK STOCK RETURNS MATURITIES SHORT- TERM FINANCE ASSETS RATIO LIABILITIES BOND MARKET DEVELOPMENT INTERNATIONAL SETTLEMENTS LONG-TERM ASSETS LEGAL RIGHTS CASH FLOW DEVELOPMENT BANK SHORT-TERM FINANCE STOCK MARKETS CREDIT MARKET BANKING MARKET DEBT MATURITY INVESTING |
| spellingShingle |
RISK PROFILES CREDIT MARKETS MONETARY POLICY DEPOSIT LIABILITY CHECKS ACCOUNTING OPTIMAL CONTRACTS DEPOSITS STANDARD DEBT CONTRACTS LIQUIDATION STOCK LOANABLE FUNDS VALUATION DEBTORS INTEREST TRADE CREDITS CREDIT AVAILABILITY GUARANTEES LIQUIDITY RISKS LONG-TERM FINANCE INTEREST RATE PRIVATE CREDIT EXCHANGE STOCK MARKET BANKING SYSTEM AVAILABILITY OF CREDIT LIQUIDITY DEVELOPING COUNTRIES TOTAL DEBT POLITICAL ECONOMY MATURITY STRUCTURE EQUITY SECURITIES POSITIVE COEFFICIENT CAPITAL STRUCTURE MORTGAGE LIQUIDITY RISK DEPOSIT MONEY BANKS BONDS DEBT CONTRACTS BORROWERS BOND FINANCING CREDIT TRANSACTIONS CENTRAL BANKS BANKRUPTCY CREDITORS INTERNATIONAL BANK CASH FLOWS PROVISION OF CREDIT SAFETY NETS CREDIBILITY FINANCIAL FRAGILITY MATURITY EXTERNAL FINANCE SMALL BUSINESS MACROECONOMIC STABILITY LONG-TERM DEBT MARKET DEVELOPMENT LONG- TERM DEBT ENFORCEMENT OF CONTRACTS MORAL HAZARD CONTRACT ENFORCEMENT FINANCIAL STUDIES CREDIT BUREAUS DEBTS CONTRACTS RISK-FREE RETURN LIQUIDITY CONSTRAINTS CASH RESERVES MARKETS DEBT LONG TERM DEBT RETURN DEPOSIT INSURANCE LENDERS BUSINESS CYCLE ACCOUNTS RECEIVABLE LOANS RESERVES BANK CREDIT MONETARY AUTHORITIES LEGAL FRAMEWORK FINANCE BAILOUT EXPENDITURE TRANSACTIONS DEBT FINANCING BANKRUPTCY LAWS EQUITY MACROECONOMIC INSTABILITY DEBT RATIO VALUE OF ASSETS CREDIT CONSTRAINTS ASSET VALUE GOOD DISCLOSURE STANDARDS OWNERSHIP STRUCTURE TRANSPARENCY MARKET CAPITALIZATION MARKET FAILURES MARKET DATA FINANCIAL CRISIS SHORT- TERM DEBT FUTURE RETURNS TREASURY BILLS SHORT-TERM DEBT BOND MARKET CONTRACT CAPITALIZATION REPAYMENT EXPENDITURES CREDIT INFORMATION DEBT SECURITIES LIQUIDITY MANAGEMENT FIRM PERFORMANCE CORPORATE INVESTMENT BALANCE SHEET MARKET MATURITY MATCHING MARKET VALUE SECURITIES TREASURY LONG-TERM INVESTMENTS SHAREHOLDERS MATURITY STRUCTURES INSURANCE BUSINESS CYCLES GOVERNMENT POLICIES ECONOMIC DEVELOPMENT POSITIVE COEFFICIENTS CORPORATE DEBT INVESTOR FIXED ASSETS BANK LOANS FINANCIAL DEVELOPMENT ACCOUNTING STANDARDS FINANCIAL MARKET MACROECONOMIC VOLATILITY INVESTMENT BOND DOMESTIC CREDIT SHARE SAVINGS DEPOSITS INVESTOR PROTECTION COLLATERAL FINANCIAL MARKETS POLITICAL STABILITY COMPETITIVE MARKETS INSTITUTIONAL DEVELOPMENT EXTERNAL DEBT INVESTMENTS LENDING CHECK INTEREST RATE RISK STOCK RETURNS MATURITIES SHORT- TERM FINANCE ASSETS RATIO LIABILITIES BOND MARKET DEVELOPMENT INTERNATIONAL SETTLEMENTS LONG-TERM ASSETS LEGAL RIGHTS CASH FLOW DEVELOPMENT BANK SHORT-TERM FINANCE STOCK MARKETS CREDIT MARKET BANKING MARKET DEBT MATURITY INVESTING Demirguc-Kunt, Asli Horváth, Bálint L. Huizinga, Harry How Does Long-Term Finance Affect Economic Volatility? |
| relation |
Policy Research Working Paper;No. 7535 |
| description |
This paper examines how the ability to
access long-term debt affects firm-level growth volatility.
The analysis finds that firms in industries with stronger
preference to use long-term finance relative to short-term
finance experience lower growth volatility in countries with
better-developed financial systems, as these firms may
benefit from reduced refinancing risk. Institutions that
facilitate the availability of credit information and
contract enforcement mitigate the refinancing risk and
therefore growth volatility associated with short-term
financing. Increased availability of long-term finance
reduces growth volatility in crisis as well as non-crisis periods. |
| format |
Working Paper |
| author |
Demirguc-Kunt, Asli Horváth, Bálint L. Huizinga, Harry |
| author_facet |
Demirguc-Kunt, Asli Horváth, Bálint L. Huizinga, Harry |
| author_sort |
Demirguc-Kunt, Asli |
| title |
How Does Long-Term Finance Affect Economic Volatility? |
| title_short |
How Does Long-Term Finance Affect Economic Volatility? |
| title_full |
How Does Long-Term Finance Affect Economic Volatility? |
| title_fullStr |
How Does Long-Term Finance Affect Economic Volatility? |
| title_full_unstemmed |
How Does Long-Term Finance Affect Economic Volatility? |
| title_sort |
how does long-term finance affect economic volatility? |
| publisher |
World Bank, Washington, DC |
| publishDate |
2016 |
| url |
http://documents.worldbank.org/curated/en/2016/01/25801185/long-term-finance-affect-economic-volatility http://hdl.handle.net/10986/23703 |
| _version_ |
1764454579341099008 |