Impact of COVID-19 on Corporate Debt Structure: Cross Country Evidence
50 Pages Posted: 6 Aug 2020 Last revised: 27 Apr 2021
Date Written: August 2, 2020
We exploit the quasi-experimental properties of the COVID-19 pandemic to investigate how national culture, trust in government, and response to the pandemic affect corporate borrowing and the structure of financial contracts. Using a cross-country analysis of 57 countries, we find that firms increase their bank and non-bank debt levels. Our findings show that firm-level characteristics such as financial flexibility, default risk, and size, in addition to national culture, government preparedness, and response to the pandemic, are crucial determinants of corporate borrowing.
Keywords: Corporate Debt; Pandemic; National Culture; Financial Contracts
JEL Classification: F3, G15, G20, G28, G3
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