Bonds at a premium: the impact of insurers on corporate bond issuers

Christian Kubitza

Research Bulletin, 2023, vol. 110

Abstract: On the basis of insurance companies’ bond investments, I examine how shifts in investors’ demand for corporate bonds affect non-financial bond issuers. When demand for their bonds increases, firms’ financing costs decrease, which encourages them to increase their bond debt and invest more. These effects crucially depend on how credit-constrained firms are. My findings emphasise the critical role that institutional investors play in shaping non-financial firms’ financing decisions and real economic activity. JEL Classification: G12, G22, G23, G3, G32

Keywords: Corporate Bonds; Corporate Investment; Institutional Investors; Insurance (search for similar items in EconPapers)
Date: 2023-09
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