EconPapers    
Economics at your fingertips  
 

Debt maturity, risk, and asymmetric information

Allen Berger (), Marco Espinosa-Vega (), W Frame () and Nathan H. Miller

No 2004-60, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We test the implications of Flannery's (1986) and Diamond's (1991) models concerning the effects of risk and asymmetric information in determining debt maturity, and we examine the overall importance of informational asymmetries in debt maturity choices. We employ data on over 6,000 commercial loans from 53 large U.S. banks. Our results for low-risk firms are consistent with the predictions of both theoretical models, but our findings for high-risk firms conflict with the predictions of Diamond's model and with much of the empirical literature. Our findings also suggest a strong quantitative role for asymmetric information in explaining debt maturity.

Keywords: Risk; Debt (search for similar items in EconPapers)
Date: 2004, Revised 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)
http://www.federalreserve.gov/pubs/feds/2004/200460/200460pap.pdf (application/pdf)
http://www.federalreserve.gov/pubs/feds/2004/200460/200460abs.html (text/html)

Related works:
Journal Article: Debt Maturity, Risk, and Asymmetric Information (2005) Downloads
Working Paper: Debt maturity, risk, and asymmetric information (2004) Downloads
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:fip:fedgfe:2004-60

Access Statistics for this paper

More papers in Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.) Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2020-11-23
Handle: RePEc:fip:fedgfe:2004-60