Towards a History of the Junk Bond Market, 1910-1955
Peter F. Basile,
Sung Won Kang,
John Landon-Lane () and
Hugh Rockoff ()
Additional contact information
Peter F. Basile: Department of Economics Rutgers University and AT&T
Sung Won Kang: Korean Economic Research Institute
Departmental Working Papers from Rutgers University, Department of Economics
We present a new monthly index of the yield on junk (high yield) bonds from 1910-1955. We then use the index to reexamine some of the main debates about the financial history of the interwar years. A close look at junk bond yields: (1) strengthens the view that the decline in lending standards in the late 1920s was modest at best: (2) casts doubt on the view that the banking crisis that began in 1930 disrupted financial markets because banks liquidated their holdings of risky bonds; (3) strengthens the view that the cost of capital rose substantially in the early 1930s and remained high for the rest of the decade; (4) casts doubt on the view that financial markets entered a liquidity trap in the second half of the 1930s; and (5) strengthens the case for believing that junk bond yields contain some information useful for making economic forecasts.
Keywords: junk bonds; interest rates; Great Depression (search for similar items in EconPapers)
JEL-codes: N17 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-his
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Working Paper: Towards a History of the Junk Bond Market, 1910-1955 (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:rut:rutres:201514
Access Statistics for this paper
More papers in Departmental Working Papers from Rutgers University, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by ().