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"Although firm financial policies were affected by a credit contraction during the recent financial crisis, the impact of increased uncertainty and decreased growth opportunities was stronger than that of the credit contraction per se. From the start of the financial crisis (third quarter of...
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During the financial crisis, corporate borrowing and capital expenditures fall sharply. Most existing research links the two phenomena by arguing that a shock to bank lending (or more generally to the corporate credit supply) caused a reduction in capital expenditures. The economic significance...
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Although firm financial policies were affected by a credit contraction during the recent financial crisis, the impact of increased uncertainty and decreased growth opportunities was stronger than that of the credit contraction per se. From the start of the financial crisis (third quarter of...
Persistent link: https://www.econbiz.de/10013069349
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 …
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