Debt overhang, rollover risk, and corporate investment: evidence from the European crisis
Sebnem Kalemli-Ozcan,
Luc Laeven and
David Moreno
No 2241, Working Paper Series from European Central Bank
Abstract:
We quantify the role of financial factors behind the sluggish post-crisis performance of European firms. We use a firm-bank-sovereign matched database to identify separate roles for firm and bank balance sheet weaknesses arising from changes in sovereign risk and aggregate demand conditions. We find that firms with higher debt levels and a higher share of short-term debt reduce their investment more after the crisis. This negative effect is stronger for firms linked to weak banks with exposures to sovereign risk, signifying increased rollover risk. These financial channels explain about 60% of the decline in aggregate corporate investment. JEL Classification: E32, E44, F34, F36, G32, E22
Keywords: bank-sovereign nexus; debt maturity; firm investment; rollover risk (search for similar items in EconPapers)
Date: 2019-02
New Economics Papers: this item is included in nep-ban, nep-bec, nep-cfn, nep-eec, nep-fdg and nep-mac
Note: 261593
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (43)
Downloads: (external link)
https://www.ecb.europa.eu//pub/pdf/scpwps/ecb.wp2241~cbea165b30.en.pdf (application/pdf)
Related works:
Journal Article: Debt Overhang, Rollover Risk, and Corporate Investment: Evidence from the European Crisis (2022) 
Working Paper: Debt Overhang, Rollover Risk, and Corporate Investment: Evidence from the European Crisis (2018) 
Working Paper: Debt Overhang, Rollover Risk, and Corporate Investment: Evidence from the European Crisis (2018) 
Working Paper: Debt Overhang, Rollover Risk, and Corporate Investment: Evidence from the European Crisis (2018) 
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: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20192241
Access Statistics for this paper
More papers in Working Paper Series from European Central Bank 60640 Frankfurt am Main, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Official Publications ().