Corporate Borrowing and Debt Maturity : The Effects of Market Access and Crises
This paper studies the extent to which access to domestic and international bond markets and syndicated loan markets and switches across them impact corporate debt maturity. Using world issuance activity during 1991-2014, the paper shows that diffe...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2016/09/26773256/long-maturity-corporate-borrowing-evidence-bond-loan-issuances-across-markets http://hdl.handle.net/10986/25060 |
| Summary: | This paper studies the extent to which
access to domestic and international bond markets and
syndicated loan markets and switches across them impact
corporate debt maturity. Using world issuance activity
during 1991-2014, the paper shows that different markets
provide financing at different terms and that the importance
of each market varies over time. Thus, the type of debt
issued and its composition affect corporate maturity. During
the global financial crisis of 2008-09, firms issued more
bonds and, in developing countries, also more domestic
loans. Because these markets are of longer maturity, the
substitution across them allowed the largest firms that
switched markets to maintain their average borrowing
maturity, even when the maturity within each market declined
for switchers and non-switchers. This evidence suggests that
firms use different debt markets as complements and
substitutes, and that compositional effects across firms and
markets have a material impact on firm-specific and
aggregate maturity. |
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