 Substitution between debt security issuance and bank loans: evidence from the SAFEGiada Durante, Annalisa Ferrando, Asger Munch Grønlund and Timo Reinelt Economic Bulletin Boxes, 2023, vol. 1 Abstract: Using firm-level data from the Survey on the Access to Finance of Enterprises (SAFE), this box investigates whether bond-issuing firms substitute bond issuance with bank loans as bond market conditions deteriorate, and whether this affects bank lending conditions for SMEs that do not rely on bond financing. In the latest round of the SAFE, euro area firms reported a widening of their corporate bond financing gap (the difference between the change in the need for and the change in the availability of corporate bond financing). As bond issuers are typically large firms that rely on multiple sources of finance, their substitution of bond issuance with bank loans could lead to a tightening of bank lending conditions for smaller firms. This box finds evidence that bond-issuing firms substitute bond issuance with bank loans when bond market conditions deteriorate. In addition, there is some indication that as corporate bond financing gaps widen, bank lending conditions deteriorate for SMEs that do not use bond financing. JEL Classification: D22, E44, E52, E58 Keywords: bank lending to firms; Corporate bonds; survey data (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:ecb:ecbbox:2023:0001:7 Access Statistics for this article More articles in Economic Bulletin Boxes from European Central Bank 60640 Frankfurt am Main, Germany. Contact information at EDIRC. |
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