IDEAS home Printed from
   My bibliography  Save this article

Is debt overhang causing firms to underinvest?


  • Filippo Occhino


Many economists have suggested that the weakness of corporate balance sheets is constraining business spending and investment, and that this in turn is impeding growth and the recovery. High levels of debt can depress spending and investment through several channels. This Commentary explains one of them?debt overhang can cause firms to underinvest?and points to ways in which this effect might be inhibiting the recovery.

Suggested Citation

  • Filippo Occhino, 2010. "Is debt overhang causing firms to underinvest?," Economic Commentary, Federal Reserve Bank of Cleveland, issue Jul.
  • Handle: RePEc:fip:fedcec:y:2010:i:jul20:n:2010-7

    Download full text from publisher

    File URL:
    File Function: Full Text
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Georgios Magkonis & Anastasia Theofilakou, 2019. "Transmission of sectoral debt shocks in OECD countries: Evidence from the income channel," Working Papers in Economics & Finance 2019-02, University of Portsmouth, Portsmouth Business School, Economics and Finance Subject Group.
    2. Willem Vanlaer & Mattia Picarelli & Wim Marneffe, 2021. "Debt and Private Investment: Does the EU Suffer from a Debt Overhang?," Open Economies Review, Springer, vol. 32(4), pages 789-820, September.
    3. Satyajit Chatterjee, 2013. "Debt overhang: why recovery from a financial crisis can be slow," Business Review, Federal Reserve Bank of Philadelphia, issue Q2, pages 1-9.
    4. Chen, Fang & Huang, Jing-Zhi & Sun, Zhenzhen & Yu, Tong, 2020. "Why do firms issue guaranteed bonds?," Journal of Banking & Finance, Elsevier, vol. 119(C).
    5. Ms. Yan Liu & Mr. Christoph B. Rosenberg, 2013. "Dealing with Private Debt Distress in the Wake of the European Financial Crisis A Review of the Economics and Legal Toolbox," IMF Working Papers 2013/044, International Monetary Fund.
    6. George M. von Furstenberg, 2011. "Concocting Marketable Cocos," Working Papers 222011, Hong Kong Institute for Monetary Research.
    7. Romanos Priftis & Anastasia Theofilakou, 2021. "Growth effects of corporate balance sheet adjustments in the EU," Empirical Economics, Springer, vol. 60(2), pages 773-801, February.

    More about this item


    Corporations - Finance; Debt;


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedcec:y:2010:i:jul20:n:2010-7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: 4D Library (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.