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Debt Composition, Institutional Demand, and Corporate Investment: Evidence from Thailand

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  • Kanis Saengchote

Abstract

This paper examines how Thai firms utilize capital market debt – specifically, commercial papers (CPs) and bonds – to manage leverage, liquidity, and investment. Using a firm-quarter panel from 2001 to 2024, we find that firms with more diversified debt structures maintain higher leverage and invest more, consistent with financial flexibility theories. CP issuance is positively associated with both capital expenditures and working capital growth; firms adjust issuance dynamically in response to their liquidity needs. Notably, CPs are not merely used as bridge instruments but as a strategic financing tool. We further demonstrate that mutual fund holdings of CP, particularly by money market funds, are associated with higher firm-level investment. These findings highlight the role of non-bank financial intermediaries in facilitating access to credit, suggesting that monetary policy transmission increasingly depends on how liquidity is intermediated through capital markets.

Suggested Citation

  • Kanis Saengchote, 2025. "Debt Composition, Institutional Demand, and Corporate Investment: Evidence from Thailand," PIER Discussion Papers 242, Puey Ungphakorn Institute for Economic Research.
    • Handle: RePEc:pui:dpaper:242
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    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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