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Corporate debt structure and economic recoveries

Author

Listed:
  • Thomas Grjebine

  • Urszula Szczerbowicz
  • Fabien Tripier

    (EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne)

Abstract

This paper analyzes the business cycle behavior of the corporate debt structure and its interaction with economic recovery. The debt structure is measured as the share of bonds in the total credit to non-financial corporations for a quarterly panel of countries over the period 1989–2013. We first show that the substitution of loans for bonds in recoveries is a regular property of business cycles. Secondly, we provide evidence that economies with high bond share and important bond-loan substitution recover from the recessions faster. This identified link between corporate debt structure and business cycles is robust to the inclusion of traditional factors which shape recessions and recovery such as the size and the quality of financial markets, the occurrence of bank crisis, the dynamics of credit, and the distribution of firm size. © 2017 Elsevier B.V.

Suggested Citation

  • Thomas Grjebine & Urszula Szczerbowicz & Fabien Tripier, 2018. "Corporate debt structure and economic recoveries," Post-Print hal-02877950, HAL.
    • Handle: RePEc:hal:journl:hal-02877950
    DOI: 10.1016/j.euroecorev.2017.09.013
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    Cited by:

    1. Stéphane Lhuissier & Urszula Szczerbowicz, 2022. "Monetary Policy and Corporate Debt Structure," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 84(3), pages 497-515, June.
    2. Pagliacci, Carolina, 2020. "Financial constraints and inflation in Latin America: The impacts of bond financing and depreciations on supply inflation," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 379-397.
    3. Martins, Manuel M.F. & Verona, Fabio, 2021. "Bond vs. bank finance and the Great Recession," Finance Research Letters, Elsevier, vol. 39(C).
    4. Simon Schumacher & Stephan Paul, 2017. "Capital Markets Union – Promising Prospects for Corporate Financing?," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 18(3), pages 289-304, August.
    5. Feiner Solís, Sara, 2021. "The effectiveness and risks of loose monetary policy under financialisation," IPE Working Papers 159/2021, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    6. Holm-Hadulla, Fédéric & Thürwächter, Claire, 2021. "Heterogeneity in corporate debt structures and the transmission of monetary policy," European Economic Review, Elsevier, vol. 136(C).
    7. Thomas Drechsel, 2023. "Earnings-Based Borrowing Constraints and Macroeconomic Fluctuations," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(2), pages 1-34, April.
    8. Kanwal Iqbal Khan & Faisal Qadeer & Mário Nuno Mata & José Chavaglia Neto & Qurat ul An Sabir & Jéssica Nunes Martins & José António Filipe, 2021. "Core Predictors of Debt Specialization: A New Insight to Optimal Capital Structure," Mathematics, MDPI, vol. 9(9), pages 1-25, April.
    9. 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.
    10. Poeschl, Johannes, 2023. "Corporate debt maturity and investment over the business cycle," European Economic Review, Elsevier, vol. 152(C).
    11. Sam Langfield & Marco Pagano, 2016. "Bank bias in Europe: effects on systemic risk and growth," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 31(85), pages 51-106.
    12. Jorge Fernández B. & Fernando Pino M. & María Ignacia Valencia B., 2021. "Liquidez del sector corporativo chileno: estimación de disponibilidad de caja bajo escenarios de estrés," Working Papers Central Bank of Chile 926, Central Bank of Chile.
    13. Cappiello, Lorenzo & Holm-Hadulla, Fédéric & Maddaloni, Angela & Mayordomo, Sergio & Unger, Robert & Arts, Laura & Meme, Nicolas & Asimakopoulos, Ioannis & Migiakis, Petros & Behrens, Caterina & Moura, 2021. "Non-bank financial intermediation in the euro area: implications for monetary policy transmission and key vulnerabilities," Occasional Paper Series 270, European Central Bank.
    14. Julio Villavicencio Vásquez, 2025. "How to develop the capital market?: make countries fitness," Documentos de Trabajo / Working Papers 2025-542, Departamento de Economía - Pontificia Universidad Católica del Perú.
    15. Cai, Yongbin & Tan, Xinyu & Fang, Wenbin & Nahar, Shamsun & Wang, Feiyang, 2025. "Digital inclusive finance and corporate debt financing: Empirical evidence from China," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 494-509.
    16. Giuzio, Margherita & Kapadia, Sujit & Kaufmann, Christoph & Storz, Manuela & Weistroffer, Christian, 2025. "Macroprudential policy, monetary policy and non-bank financial intermediation," Working Paper Series 3130, European Central Bank.
    17. Joost Bats, 2020. "Corporates dependence on banks: The impact of ECB corporate sector purchases," Working Papers 667, DNB.
    18. Ayyagari, Meghana & Demirgüç-Kunt, Asli & Maksimovic, Vojislav, 2021. "How common are credit-less recoveries? Firm-level evidence on the role of financial markets in crisis recovery," Journal of Corporate Finance, Elsevier, vol. 69(C).
    19. Jelena Zivanovic, 2019. "Corporate Debt Composition and Business Cycles," Staff Working Papers 19-5, Bank of Canada.
    20. Thomas Brand & Fabien Tripier, 2021. "Risk Shocks and Divergence between the Euro Area and the US in the Aftermath of the Great Recession," Annals of Economics and Statistics, GENES, issue 143, pages 137-163.
    21. Kanwal Iqbal Khan & Faisal Qadeer & Mário Nuno Mata & Rui Miguel Dantas & João Xavier Rita & Jéssica Nunes Martins, 2021. "Debt Market Trends and Predictors of Specialization: An Analysis of Pakistani Corporate Sector," JRFM, MDPI, vol. 14(5), pages 1-16, May.
    22. Iwata, Kazumasa & Jean, Sébastien & Kastrop, Christian & Loewald, Chris & Véron, Nicolas, 2018. "T20 resilience and inclusive growth," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 12, pages 1-10.

    More about this item

    Keywords

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    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services

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