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Internal Versus External Capital Markets

Gertner, Robert H. - 2010

This paper presents a framework for analyzing the costs and benefits of internal vs. external capital allocation. We focus primarily on comparing an internal capital market to bank lending. While both represent centralized forms of financing, in the former case the financing is owner-provided,...

Persistent link: https://www.econbiz.de/10013139878

The Optimal Concentration of Creditors

Bris, Arturo - 2010

There are situations in which dispersed creditors (e.g., public creditors) have more difficulties and higher costs when collecting their claims in financial distress than concentrated creditors (e.g., banks). Under this assumption, our model predicts that measures of debt concentration relate...

Persistent link: https://www.econbiz.de/10012763082

Banks as Secret Keepers

Dang, Tri Vi - 2014

Banks are optimally opaque institutions. They produce debt for use as a transaction medium (bank money), which requires that information about the backing assets - loans - not be revealed, so that bank money does not fluctuate in value, reducing the efficiency of trade. This need for opacity...

Persistent link: https://www.econbiz.de/10013051755

Financial Frictions and Firm Dynamics

Bergin, Paul R. - 2014

Firm entry dynamics are an integral part of the propagation of financial shocks to the real economy. A VAR documents that adverse financial shocks in the U.S. postwar period are associated with a fall in new firm creation and a fall in firm equity values. We propose a DSGE model with endogenous...

Persistent link: https://www.econbiz.de/10013054047

Corporate Debt Structure and the Financial Crisis

De Fiore, Fiorella - 2014

We present a DSGE model where firms optimally choose among alternative instruments of external finance. The model is used to explain the evolving composition of corporate debt during the financial crisis of 2008-09, namely the observed shift from bank finance to bond finance, at a time when the...

Persistent link: https://www.econbiz.de/10013040533

The Risk Anomaly Tradeoff of Leverage

Baker, Malcolm P. - 2016

for corporate leverage. The risk anomaly generates a simple tradeoff theory: At zero leverage, the overall cost of capital …. Empirically, the risk anomaly tradeoff theory and the traditional tradeoff theory are both consistent with the finding that firms … with low-risk assets choose higher leverage. More uniquely, the risk anomaly theory helps to explain why leverage is …

Persistent link: https://www.econbiz.de/10012995981

Zombies at Large? Corporate Debt Overhang and the Macroeconomy

Jordà, Òscar; Kornejew, Martin; Schularick, Moritz; … - 2022

risks either. Yet in line with theory, we find that the economic costs of corporate debt booms rise when inefficient debt …

Persistent link: https://www.econbiz.de/10013404600

The Mystery of Zero-Leverage Firms

Strebulaev, Ilya A. - 2012

This paper documents the puzzling evidence that a substantial number of large public non-financial US firms follow a zero-debt policy. Over the 1962-2009 period, on average 10.2% of such firms have zero debt and almost 22% have less than 5% book leverage ratio. Neither industry nor size can...

Persistent link: https://www.econbiz.de/10013108257

As Certain as Debt and Taxes : Estimating the Tax Sensitivity of Leverage from Exogenous State Tax Changes

Heider, Florian - 2013

tax increase of 131 basis points. Contrary to static trade-off theory, the tax sensitivity of leverage is asymmetric …

Persistent link: https://www.econbiz.de/10013090550

Leverage Across Firms, Banks, and Countries

Kalemli-Ozcan, Sebnem - 2013

We present new stylized facts on bank and firm leverage for 2000-2009 using extensive internationally comparable micro level data from several countries. The main result is that there was very little buildup in leverage for the average non-financial firm and commercial bank before the crisis,...

Persistent link: https://www.econbiz.de/10013092490

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