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Global corporate debt during crises: Implications of switching borrowing across markets

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  • Cortina, Juan J.
  • Didier, Tatiana
  • Schmukler, Sergio L.

Abstract

This paper shows how crises prompted firms to switch borrowing across debt markets, impacting the amount borrowed, maturity, and currency denomination at the firm and aggregate levels. During financial crises, firms from advanced and emerging economies shifted their issuance activity between domestic and international syndicated loans and corporate bonds. Firms increased their borrowing in markets not directly hit by crises, partly compensating for declines in shock-hit markets, which provides evidence of market-specific credit supply shocks. As firms moved away from the markets in crisis and borrowed elsewhere, they maintained their borrowing maturity and changed their currency denomination. Changes occurred not only within firms, but also in the composition of issuing firms. The number of borrowing firms declined in crisis-hit markets and increased elsewhere. Mostly large firms issued during crises and switched markets. Overall, the debt dynamics obtained from studying jointly different debt markets differ from those observed in individual markets.

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  • Cortina, Juan J. & Didier, Tatiana & Schmukler, Sergio L., 2021. "Global corporate debt during crises: Implications of switching borrowing across markets," Journal of International Economics, Elsevier, vol. 131(C).
  • Handle: RePEc:eee:inecon:v:131:y:2021:i:c:s0022199621000647
    DOI: 10.1016/j.jinteco.2021.103487
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    More about this item

    Keywords

    Banking crises; Capital raising; Corporate bonds; Debt maturity; Domestic currency debt; Firm financing; Foreign currency debt; Global financial crisis; Security issuances; Syndicated loans;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles
    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G00 - Financial Economics - - General - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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