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

48 Pages Posted: 6 Aug 2020

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 examine the impact of the COVID-19 pandemic on firm borrowing behavior across 31 countries. We exploit the quasi-experimental properties of this pandemic to investigate how national culture, government preparedness, and response to the pandemic affect corporate borrowing and the structure of financial contracts. We find that firms increase their levels of bank and non-bank debt. Our findings show that firm-level characteristics such as financial flexibility, default risk, and size, along with 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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