Economics at your fingertips  

Switching to bonds when loans are scarce: Evidence from four U.S. crises

Manisha Goel and Michelle Zemel

Journal of Corporate Finance, 2018, vol. 52, issue C, 1-27

Abstract: To what extent do public firms switch to bonds when bank credit supply falls, and how do their real outcomes compare to those of other firms? Examining four U.S. crises during 1988–2011 shows that only 8.4% of debt-receiving firms broke their reliance on loans and switched to bonds. These were high quality firms that, despite incurring large costs, did not suffer significantly more in output, investment, and employment than predominantly bond-issuing firms. Most firms either received loans, or no debt, and fared significantly worse. Thus, public firms do not widely substitute bonds for loans, remaining vulnerable to bank health fluctuations.

Keywords: Financial crises; Corporate finance; Banks; Bonds; Employment; Output; Investment (search for similar items in EconPapers)
JEL-codes: E44 G01 G30 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter

More articles in Journal of Corporate Finance from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2019-04-06
Handle: RePEc:eee:corfin:v:52:y:2018:i:c:p:1-27