We study the endogenous determination of corporate debt maturity in a setting with default risk. We assume that firms … must access the bond market and they issue debt with a flexible structure (coupon, face value, and maturity). Initially …, the firm is in a low growth/illiquid state that requires debt refinancing if it matures. Since lenders do not refinance …

reason. -- Liquidity ; Asymmetric Information ; Debt maturity …Motivated by the financial crisis of 2007-2009 several papers have provided explanations for why liquidity may dry up … during market stress. This paper also looks at this issue but focuses on the question as to why the liquidity crunch was not …