German Mittelstand bonds: yield spreads and liquidity

Sebastian Utz, Martina Weber and Maximilian Wimmer ()
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Martina Weber: University of Regensburg
Maximilian Wimmer: University of Mannheim

Journal of Business Economics, 2016, vol. 86, issue 1, No 7, 103-129

Abstract: Abstract We estimate a cross-sectional model of the yield spreads of German Mittelstand bonds as a function of liquidity measures as well as a number of variables that control for both the characteristics of the issuing firm and the bond characteristics. Our results show a significant positive effect of illiquidity on the yield spread, which persists after controlling for the risk of the bond. Economically, the size of the liquidity premium of Mittelstand bonds is approximately twice the size of speculative grade US corporate bonds. Our findings are robust to different measures of liquidity and potential endogeneity biases.

Keywords: German Mittelstand bonds; Liquidity; Yield spread; SME; Minibonds (search for similar items in EconPapers)
JEL-codes: G12 G32 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (6)

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DOI: 10.1007/s11573-015-0791-3

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