Working Paper: CEPR ID: DP13008
Authors: Juan José Cortina; Tatiana Didier; Sergio Schmukler
Abstract: This paper studies how access to different markets and crises impact debt financing and maturity. Using data on worldwide corporate issuance activity in domestic and international bond and syndicated loan markets during 1991-2014, the paper shows that these markets are affected differently by crises, while providing financing to different firms at distinct maturities. During the global financial crisis and domestic banking crises, large firms moved away from the crisis-hit markets toward less affected, longer-term ones, switching their financing sources. Hence, firms that switched markets compensated for the financing shocks and maintained, or increased, their borrowing maturity. Country-level maturities also remained stable or even lengthened. However, firms that did not move across markets typically experienced declining financing and shorter borrowing maturities. Firm movements across markets are consistent with credit tightening during crises due to supply-side shocks, significantly affecting debt composition, borrowing maturity, and credit redistribution across firms of different sizes.
Keywords: borrowing maturity; capital raising; corporate bonds; debt markets; firm financing; global financial crisis; GFC; syndicated loans
JEL Codes: F65; G00; G10; G32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Market Switching (C34) | Borrowing Maturity (G51) |
| Crisis Hit Markets (G01) | Declining Financing (G32) |
| Crisis Hit Markets (G01) | Shorter Maturities (G19) |
| Large Firms Switching Markets (L19) | Maintenance of Borrowing Maturity (G51) |
| Country-Level Maturities Stable During Crises (F65) | Aggregate Stability in Borrowing Maturity (G51) |