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Public debt and corporate debt: Is there a crowding out effect in Brazil?

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  • Hoerlle, Carlos Stahlhoefer
  • Kayo, Eduardo Kazuo

Abstract

This study investigates the impact of public debt on the financing policy of Brazilian listed companies. The capital structure behavior of 451 listed companies from 1999 to 2020 is empirically analyzed using unbalanced panel data estimated with fixed effects. The results suggest a negative relationship between public debt and corporate leverage during this period, with a more significant effect on long-term debt. These results are robust to the inclusion of potential confounding factors, omitted variables, and a difference-in-differences strategy.

Suggested Citation

  • Hoerlle, Carlos Stahlhoefer & Kayo, Eduardo Kazuo, 2025. "Public debt and corporate debt: Is there a crowding out effect in Brazil?," Finance Research Letters, Elsevier, vol. 74(C).
    • Handle: RePEc:eee:finlet:v:74:y:2025:i:c:s1544612325000236
    DOI: 10.1016/j.frl.2025.106758
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    References listed on IDEAS

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