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Corporate debt structure and economic recoveries: a cross-country analysis

Author

Listed:
  • Thomas GRJEBINE
  • Urszula SZCZERBOWICZ
  • Fabien TRIPIER

Abstract

The recovery after the 2008 crisis was faster in the United States than in the euro area. Some authors argued that the US financial system’s capacity to replace bank financing with corporate bond financing contributed to the faster recovery. This Rue de la Banque summarises an empirical investigation of the business-cycle behaviour of corporate debt structure in 23 countries over the period 1989-2013. The results highlight two interesting facts. First, the substitution of loans for bonds in recoveries is a regular property of business cycles. Second, economies with a high share of bond financing and significant bond-loan substitution recover faster from recessions. These findings support the Capital Markets Union project which includes the diversification of funding sources for European firms.

Suggested Citation

  • Thomas GRJEBINE & Urszula SZCZERBOWICZ & Fabien TRIPIER, 2018. "Corporate debt structure and economic recoveries: a cross-country analysis," Rue de la Banque, Banque de France, issue 63, June.
  • Handle: RePEc:bfr:rueban:2018:63
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    References listed on IDEAS

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    4. Grjebine, Thomas & Szczerbowicz, Urszula & Tripier, Fabien, 2018. "Corporate debt structure and economic recoveries," European Economic Review, Elsevier, vol. 101(C), pages 77-100.
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    7. Tobias Adrian & Paolo Colla & Hyun Song Shin, 2013. "Which Financial Frictions? Parsing the Evidence from the Financial Crisis of 2007 to 2009," NBER Macroeconomics Annual, University of Chicago Press, vol. 27(1), pages 159-214.
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    Cited by:

    1. Joost Bats, 2020. "Corporates' dependence on banks: The impact of ECB corporate sector purchases," DNB Working Papers 667, Netherlands Central Bank, Research Department.
    2. Jelena Zivanovic, 2019. "Corporate Debt Composition and Business Cycles," Staff Working Papers 19-5, Bank of Canada.
    3. Stépahne Lhuissier & Urszula Szczerbowicz, 2018. "Monetary Policy and Corporate Debt Structure," Working papers 697, Banque de France.
    4. Holm-Hadulla, Fédéric & Thürwächter, Claire, 2020. "Heterogeneity in corporate debt structures and the transmission of monetary policy," Working Paper Series 2402, European Central Bank.

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