Trends in Corporate Borrowing
Annual Review of Financial Economics 2020
42 Pages Posted: 25 Oct 2020
Date Written: October 19, 2020
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: Suggested Citation