By introducing credit market frictions into the setting in which a firm has a option to restructure debt. We study the effects of credit market friction on the debt restructuring and leverage. The results show that the debt restructuring strategy will accelerate under lower credit market...

We propose and test a new channel through which fiscal policy changes affect the supply of intermediated credit and the real economy. Lenders that have greater exposure to firms expected to repatriate a significant amount of foreign income as a result of a 2004-2005 U.S. tax holiday subsequently...