 Bank debt and market debt: an empirical analysis for Spanish firmsMaría José Casasola and Josep Tribó DEE - Working Papers. Business Economics. WB from Universidad Carlos III de Madrid. Departamento de EconomÃa de la Empresa Abstract: This paper examines the effect on the firm's banking cost of the issue of debt securities. We argue over the existence of a positive relationship between the issue of market debt and the reduction of firm's banking cost. This idea relies on three main arguments: i) Banks can delegate to investors the supervision task, a feature that makes bank supervision less costly. ii) The issue of public debt increases firms' bargaining power in front of the banks, as the former can get funds through non-bank financing ch annels. iii) Banks with no prior information on the issuing firm may interpret the issue of debt securities as a positive signal of firm's quality. Additionally, we argue that the previous effects are less important for non-first issues and are sensible to the maturity of the bond issued. We empirically test these and other related theoretical results making use of a database of Spanish non-financial firms during the 1993-1998 period. We find empirical support for our theoretical contentions. Date: 2002-03 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:cte:wbrepe:wb020702 Access Statistics for this paper More papers in DEE - Working Papers. Business Economics. WB from Universidad Carlos III de Madrid. Departamento de EconomÃa de la Empresa |
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