default; ii) they can choose to raise finance through bank loans or corporate bonds; and iii) banks are more efficient than … finance between the US and the euro area. We suggest an explanation of those differences based on information availability …

We present a DSGE model where firms optimally choose among alternative instruments of external finance. The model is … shift from bank finance to bond finance, at a time when the cost of market debt rose above the cost of bank loans. We show … instruments of debt finance are important to shield the economy from adverse real effects of a financial crisis …