Global corporate debt during crises: Implications of switching borrowing across markets

Juan J. Cortina, Tatiana Didier and Sergio Schmukler

Journal of International Economics, 2021, vol. 131, issue C

Abstract: This paper shows how crises prompted firms to switch borrowing across debt markets, impacting the amount borrowed, maturity, and currency denomination at the firm and aggregate levels. During financial crises, firms from advanced and emerging economies shifted their issuance activity between domestic and international syndicated loans and corporate bonds. Firms increased their borrowing in markets not directly hit by crises, partly compensating for declines in shock-hit markets, which provides evidence of market-specific credit supply shocks. As firms moved away from the markets in crisis and borrowed elsewhere, they maintained their borrowing maturity and changed their currency denomination. Changes occurred not only within firms, but also in the composition of issuing firms. The number of borrowing firms declined in crisis-hit markets and increased elsewhere. Mostly large firms issued during crises and switched markets. Overall, the debt dynamics obtained from studying jointly different debt markets differ from those observed in individual markets.

Keywords: Banking crises; Capital raising; Corporate bonds; Debt maturity; Domestic currency debt; Firm financing; Foreign currency debt; Global financial crisis; Security issuances; Syndicated loans (search for similar items in EconPapers)
JEL-codes: F30 F32 F34 F44 F60 F65 G00 G10 G32 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Working Paper: Global Corporate Debt during Crises: Implications of Switching Borrowing across Markets (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:131:y:2021:i:c:s0022199621000647

DOI: 10.1016/j.jinteco.2021.103487

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