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...

We find that US public firms spread out their debt more across different sources in recession quarters, making measures of debt concentration move pro-cyclically, on average. There is substantial cross-sectional variation in these dynamics. In particular, firms with already low leverage and high...

This paper presents a macro-economic methodology for evaluating the forward-looking Sharpe Ratios of the equity and debt components of the United States public company capital structure. Using this framework, it is shown that the equity and debt Sharpe Ratios are both time variant and disparate....

This paper investigates the relationship between the borrowing firm's cross-ownership and its choice between bank loans and public bonds when raising new debt capital. We find that cross-ownership significantly reduces the firm's use of bank loans when making debt issuance decisions. Evidence...