Corporate Debt Structure and Economic Recoveries

59 Pages Posted: 24 Oct 2017

See all articles by Thomas Grjebine

Thomas Grjebine

Centre d'Etudes Prospectives et d'Info. Internationales (CEPII)

Urszula Szczerbowicz

Banque de France

Fabien Tripier

University of Lille I

Date Written: October 2017

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.

Keywords: Corporate Debt; Bonds Markets; Banking; Business Cycles; Recovery; Financial Frictions

JEL Classification: E3; E4; G1; G2

Suggested Citation

Grjebine, Thomas and Szczerbowicz, Urszula and Tripier, Fabien, Corporate Debt Structure and Economic Recoveries (October 2017). Banque de France Working Paper No. 646. Available at SSRN: https://ssrn.com/abstract=3057390 or http://dx.doi.org/10.2139/ssrn.3057390

Thomas Grjebine

Centre d'Etudes Prospectives et d'Info. Internationales (CEPII) ( email )

9 rue Georges Pitard
Paris Cedex 15, F-75015
France

Urszula Szczerbowicz (Contact Author)

Banque de France ( email )

Paris
France

Fabien Tripier

University of Lille I

104, avenue du peuple Belge
Villeneuve d'Ascq Cedex, 59655
France

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