Corporate debt structure and heterogeneous monetary policy transmission

Marie Alder, Nuno Coimbra and Urszula Szczerbowicz

No 18787, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Using French firm data, we show that corporate debt structure plays a significant role in monetary policy transmission. In addition to interest rate policy, we analyse the impact of a novel ECB-induced sovereign spread shock, related to credit risk and liquidity, and show that both types of policy tightening diminish French firms’ investment. The transmission of conventional shocks is stronger for firms with higher shares of bank debt, but contractionary bond spread shocks lower investment more for firms with higher shares of bond debt. Bond liquidity and credit risk tightening leads to higher bond-bank loan interest rate spreads and lower bond issuance.

Keywords: Monetary; policy; transmission (search for similar items in EconPapers)
JEL-codes: E22 E43 E44 E52 (search for similar items in EconPapers)
Date: 2024-01
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Related works:
Chapter: Corporate debt structure and heterogeneous monetary policy transmission (2025)
Working Paper: Corporate Debt Structure and Heterogeneous Monetary Policy Transmission (2023)
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