Rollover Risk and the Dynamics of Debt

47 Pages Posted: 26 Nov 2014 Last revised: 15 Mar 2023

See all articles by Maria Chaderina

Maria Chaderina

University of Oregon - Lundquist College of Business

Date Written: March 14, 2023


I study how firms adjust leverage, maturity and cash to manage rollover risk, and show that time-variation in concentration of maturity dates arises endogenously. To avoid rollover risk, firms prefer long-term debt with dispersed maturity dates. However, severe negative shocks force firms to borrow above an optimal level. They issue short-term debt as a commitment to delever in the next period. This concentrates maturity dates in the next period. The calibrated version of the model matches several empirical facts: more profitable firms have high leverage, use longer maturity bonds and stagger their maturity dates.

Keywords: Rollover Risk, Liquidity Policy, Cash, Maturity Structure, Dynamic Maturity, Dynamic Leverage

JEL Classification: G32, G33

Suggested Citation

Chaderina, Maria, Rollover Risk and the Dynamics of Debt (March 14, 2023). Available at SSRN: or

Maria Chaderina (Contact Author)

University of Oregon - Lundquist College of Business ( email )

Lundquist College of Business
1208 University of Oregon
Eugene, OR 97403
United States

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