 COVID-19 pandemic and debt financing by firms: Unravelling the channelsBalagopal Gopalakrishnan, Joshy Jacob and Sanket Mohapatra Economic Modelling, 2022, vol. 114, issue C Abstract: The COVID-19-induced disruptions and the consequent government responses stretched the financial resources of firms. Recent studies document an increase in debt financing by firms during the pandemic. Using firm-level data from 61 countries, we deepen the understanding of the impact of the pandemic by examining the variation in loan and bond financing attributable to COVID-19-specific factors. Indicative of heightened precautionary needs, firms with higher pandemic exposure and those located in countries with stringent lockdowns have a higher propensity to raise debt. Furthermore, firms in industries less amenable to remote working also have a higher propensity to raise debt, but face higher financing costs compared to their peers. Reflective of opportunistic investment motives, firms that hold a relatively positive outlook have a greater likelihood of raising loan financing. The findings draw attention to the role of real-side factors and managerial motives that drive debt financing during a distress episode. Keywords: COVID-19; Pandemic; Bond financing; Syndicated loans; Work-from-home (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:114:y:2022:i:c:s0264999322001754 DOI: 10.1016/j.econmod.2022.105929 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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