, holding intermediaries' debt as cash. This paper shows that intermediaries' liquidity creation stimulates growth -- firms hold … their debt for unhedgeable investment needs -- but also breeds instability through procyclical intermediary leverage …. Introducing government debt as a competing source of liquidity is a double-edged sword: firms hold more liquidity in every state …

We investigate the secular increase in the corporate cash holding over the period 1980-2006. We show that along with … firm characteristic–related variables, monetary policy and banking structure have a significant bearing on corporate cash … holdings, as they determine the opportunity cost of holding cash as well as access to cash. Specifically, we establish that the …

We show that a policy rate cut lengthens corporate debt maturity. A 1 standard deviation (10 basis points, b ….p.) expansionary interest rate shock raises the share of long-term debt by 87 b.p., explaining about 20% of its variation. Moreover, we …-seeking investors explains the findings: a policy rate cut boosts demand for long-term debt-securities by yield-seeking investors; large …

frictions and provides additional net debt capacity, as measured by higher leverage and lower cash holdings. Brand perception … cash flow volatility as well as higher credit ratings for potentially volatile firms. The impact of brand is stronger among …

from a financial recession using a model that can account for the observed default and leverage dynamics during the … account for the observed default and leverage dynamics. Following an adverse aggregate shock, banks deleverage through two …