when investment is debt-financed. In such a case a firm pays the creditor not only the sum of annual interest (initial … the investment is debt-financed, the interest payment additionally reduces the corporate tax base. The research findings … optimum debt maturity tends to correlate positively with the corporate tax rate but negatively with the interest rate. In the …

Consumption risk sharing among U.S. federal states increases in booms and decreases in recessions. We find that small … firms' access to credit markets plays an important role in explaining this stylized fact: business cycle fluctuations in … aggregate risk sharing are more pronounced in states in which small firms account for a large share income or employment. In …

others blow over. We demonstrate that what makes some bubbles more dangerous than others is credit. When fueled by credit … slower recoveries. Credit-financed housing price bubbles have emerged as a particularly dangerous phenomenon. …

risk of firm default. …

Most domestic and international firm-to-firm transactions rely on trade credit, where sellers grant buyers time to pay … about trade credit use: trade credit use increases with firm-to-firm relationship length, an effect that is stronger for … develops a model featuring enforcement frictions, learning, and a financing cost advantage of trade credit that can rationalize …

This paper examines the effects of Islamic banking on the causal linkages between credit and GDP by comparing two sets … analysis provides evidence of long-run causality running from credit to GDP in countries with Islamic banks only. This is …

question, we identify the compositional changes in banks' supply of credit using the variation in their holdings of residential …

equation ; risk aversion ; debt management ; warning signals … recent subprime mortgage crisis. Why did the financial markets fail to anticipate the recent debt crisis, despite the large … capital gain, the return on capital and the interest rate. An optimal debt ratio is derived where the drift is probabilistic …

leverage, the optimum and excessive risk and the probability of a debt crisis. The theoretically founded early warning signals …A healthy financial system encourages the efficient allocation of capital and risk. The collapse of the house price … stochastic optimal control (SOC)/dynamic risk management is a much more effective approach to determine the optimal degree of …

What is an optimal or a sustainable external debt - for a country, region or sector? How should one monitor and … evaluate debt to preclude a crisis? We use stochastic optimal control/dynamic programming to derive an optimal debt. The … explain the implications of DP. An explicit example is the US Agricultural debt crisis. …