Corporate Debt Structure and the Financial Crisis

Fiorella De Fiore and Harald Uhlig ()

No 20730, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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 cost of market debt rose above the cost of bank loans. We show that the flexibility offered by banks on the terms of their loans and firm's ability to substitute among alternative instruments of debt finance are important to shield the economy from adverse real effects of a financial crisis.

JEL-codes: E22 E32 E44 E5 (search for similar items in EconPapers)
Date: 2014-12
New Economics Papers: this item is included in nep-ban, nep-dge and nep-mac
Note: EFG
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Citations: View citations in EconPapers (3)

Published as Fiorella De Fiore & Harald Uhlig, 2015. "Corporate Debt Structure and the Financial Crisis," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(8), pages 1571-1598, December.

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Journal Article: Corporate Debt Structure and the Financial Crisis (2015)
Working Paper: Corporate Debt Structure and the Financial Crisis (2015)
Working Paper: Corporate Debt Structure and the Financial Crisis (2012)
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