Impact of COVID-19 on Corporate Debt Structure: Cross Country Evidence

62 Pages Posted: 6 Aug 2020 Last revised: 27 Apr 2021

See all articles by Bill B. Francis

Bill B. Francis

Rensselaer Polytechnic Institute (RPI) - Lally School of Management

Raffi E. García

Rensselaer Polytechnic Institute

Zenu Sharma

St John's University; Rensselaer Polytechnic Institute

Date Written: August 2, 2020

Abstract

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

Suggested Citation

Francis, Bill B. and García, Raffi E. and Sharma, Zenu, Impact of COVID-19 on Corporate Debt Structure: Cross Country Evidence (August 2, 2020). Available at SSRN: https://ssrn.com/abstract=3666684 or http://dx.doi.org/10.2139/ssrn.3666684

Bill B. Francis

Rensselaer Polytechnic Institute (RPI) - Lally School of Management ( email )

Troy, NY 12180
United States

Raffi E. García

Rensselaer Polytechnic Institute ( email )

Troy, NY 12180
United States
12180 (Fax)

HOME PAGE: http://https://sites.google.com/site/raffigarcia/

Zenu Sharma (Contact Author)

St John's University ( email )

8000 Utopia Pkwy
Queens, NY 11439
United States
7189905496 (Phone)

Rensselaer Polytechnic Institute ( email )

Troy, NY 12180
United States

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