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Contractual savings, capital markets, and firms'financing choices

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Author Info

  • Musalem, Alberto R.
  • Impavido, Gregorio
  • Tressel, Thierry

Abstract

The authors analyze the relationship between the development and asset allocation of contractual savings and firms'capital structures. The authors develop a simple model of firms'leverage and debt maturity decisions. They illustrate the mechanisms through which contractual savings development may affect corporate financing patterns. In the empirical section, the authors show that the development and asset allocation of contractual savings have an independent impact on firms'financing choices. Different channels are identified. In market-based economies, an increase in the proportion of shares in the portfolio of contractual savings leads to a decline in firms'leverage. In bank-based economies, instead, an increase in the size of contractual savings is associated with an increase in leverage and debt maturity in the corporate sector

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2612.

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Date of creation: 01 Jun 2001
Date of revision:
Handle: RePEc:wbk:wbrwps:2612

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Related research

Keywords: Banks&Banking Reform; Payment Systems&Infrastructure; International Terrorism&Counterterrorism; Economic Theory&Research; Financial Intermediation; Banks&Banking Reform; Economic Theory&Research; Financial Intermediation; Environmental Economics&Policies; International Terrorism&Counterterrorism;

References

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  1. Walker, Eduardo & Lefort, Fernando, 2002. "Pension reform and capital markets : are there any (hard) links?," Social Protection Discussion Papers 24082, The World Bank.
  2. von Thadden, Ernst-Ludwig, 1995. "Long-Term Contracts, Short-Term Investment and Monitoring," Review of Economic Studies, Wiley Blackwell, vol. 62(4), pages 557-75, October.
  3. Patrick Rey & Joseph E. Stiglitz, 1993. "Short-Term Contracts as a Monitoring Device," NBER Working Papers 4514, National Bureau of Economic Research, Inc.
  4. Impavido, Gregorio & Musalem, Alberto R., 2000. "Contractual savings, stock, and asset markets," Policy Research Working Paper Series 2490, The World Bank.
  5. Pomerleano, Michael, 1998. "The East Asia crisis and corporate finances : the untold micro story," Policy Research Working Paper Series 1990, The World Bank.
  6. Erik Berglof & Ernst-Ludwig von Thadden, 1994. "Capital Structure with Multiple Investors," CEPR Financial Markets Paper 0044, European Science Foundation Network in Financial Markets, c/o C.E.P.R, 77 Bastwick Street, London EC1V 3PZ.
  7. Campbell, Rachel A.J., 2008. "Art finance," Open Access publications from Maastricht University urn:nbn:nl:ui:27-19578, Maastricht University.
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Citations

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Cited by:
  1. Kuhan Harichandra & S. M. Thangavelu, 2004. "Institutional Investors, Financial Sector Development And Economic Growth in OECD Countries," Departmental Working Papers wp0405, National University of Singapore, Department of Economics.
  2. Impavido, Gregorio & Musalem, Alberto R., 2000. "Contractual savings, stock, and asset markets," Policy Research Working Paper Series 2490, The World Bank.
  3. E Philip Davis, 2005. "The Role Of Pension Funds As Institutional Investors In Emerging Markets," Economics and Finance Discussion Papers 05-18, Economics and Finance Section, School of Social Sciences, Brunel University.
  4. Vittas, Dimitri, 2004. "Insurance regulation in Jordan : New rules--old system," Policy Research Working Paper Series 3298, The World Bank.
  5. Gianni De Nicoló & M. G. Zephirin & Philip F. Bartholomew & Jahanara Zaman, 2003. "Bank Consolidation, Internationalization and Conglomeration: Trends and Implications for Financial Risk," IMF Working Papers 03/158, International Monetary Fund.
  6. Yuwei Hu, 2012. "Growth of Asian Pension Assets: Implications for Financial and Capital Markets," Working Papers id:5025, eSocialSciences.
  7. Tullio Jappelli & Luigi Pistaferri, 2002. "Tax Incentives for Household Saving and Borrowing," CSEF Working Papers 83, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  8. Hu, Yuwei, 2012. "Growth of Asian Pension Assets: Implications for Financial and Capital Markets," ADBI Working Papers 360, Asian Development Bank Institute.
  9. Impavido, Gregorio & Musalem, Alberto R. & Tressel, Thierry, 2001. "Contractual savings institutions and banks'stability and efficiency," Policy Research Working Paper Series 2751, The World Bank.

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