Corporate Borrowing and Debt Maturity: The Effects of Market Access and Crises

60 Pages Posted: 26 Jun 2018

See all articles by Juan Jose Cortina Lorente

Juan Jose Cortina Lorente

World Bank

Tatiana Didier

World Bank

Sergio L. Schmukler

World Bank - Development Research Group (DECRG)

Date Written: June 2018

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 Classification: F65, G00, G10, G32

Suggested Citation

Cortina Lorente, Juan Jose and Didier, Tatiana and Schmukler, Sergio, Corporate Borrowing and Debt Maturity: The Effects of Market Access and Crises (June 2018). CEPR Discussion Paper No. DP13008. Available at SSRN: https://ssrn.com/abstract=3202300

Juan Jose Cortina Lorente (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Tatiana Didier

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States
(202)458-1525 (Phone)

Sergio Schmukler

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN MC 3-301
Washington, DC 20433
United States
202-458-4167 (Phone)
202-522-3518 (Fax)

HOME PAGE: http://www.worldbank.org/en/about/people/s/sergio-schmukler

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