Trends in Corporate Borrowing

Annual Review of Financial Economics 2020

42 Pages Posted: 25 Oct 2020

See all articles by Tobias Berg

Tobias Berg

Frankfurt School of Finance & Management

Anthony Saunders

New York University - Leonard N. Stern School of Business

Sascha Steffen

Frankfurt School of Finance & Management

Date Written: October 19, 2020

Abstract

Corporate borrowing has substantially changed over the last two decades. In this paper, we investigate changes in borrowing of U.S. publicly listed firms along trends in five key areas: (1) the funding mix of firms and the importance of balance-sheet versus off-balance-sheet borrowing; (2) the costs of corporate borrowing; (3) trends in non-price loan terms; (4) the importance of banks vs- non-bank institutional investors; and (5) the purpose for corporate borrowing. We explore these trends graphically over the 2002 to 2019 period, provide a narrative for these trends based on the theoretical and empirical literature in the respective areas, and discuss some implications for the current COVID-19 pandemic. We finally document these trends for firms in the Eurozone countries and delineate similarities and differences.

Keywords: Corporate borrowing, loans, bonds, contingent liquidity, institutional investors, loan purposes

JEL Classification: G00, G20, G30

Suggested Citation

Berg, Tobias and Saunders, Anthony and Steffen, Sascha, Trends in Corporate Borrowing (October 19, 2020). Annual Review of Financial Economics 2020, Available at SSRN: https://ssrn.com/abstract=3714545 or http://dx.doi.org/10.2139/ssrn.3714545

Tobias Berg (Contact Author)

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

Anthony Saunders

New York University - Leonard N. Stern School of Business ( email )

44 West 4th Street
9-190, MEC
New York, NY 10012-1126
United States
212-998-0711 (Phone)
212-995-4220 (Fax)

Sascha Steffen

Frankfurt School of Finance & Management ( email )

Adickesallee
32-34
Frankfurt, 60322
Germany
16097326929 (Phone)

HOME PAGE: http://www.sascha-steffen.de

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