The Rise of Bond Financing in Europe
69 Pages Posted: 8 Feb 2021 Last revised: 15 Feb 2022
Date Written: February 10, 2022
Using large panel data of public and private firms, this paper dissects the growth of bond financing in the Euro Area through the lens of the cross-section of issuers. In recent years, the composition of bond issuers has shifted, with the entry of many smaller and riskier issuers. New issuers invest and grow, instead of simply repaying bank loans. Moreover, holdings of `buy-and-hold' bond investors are large in aggregate but small for weaker issuers. Nevertheless, the bond investors' sell-off after March 2020 was largely directed at bonds of larger, safer issuers. This micro-evidence can shed light on the implications of corporate bonds market development for smaller firms and financial stability.
Keywords: Corporate bond market, debt structure, disintermediation, ECB, monetary policy, quantitative easing, bond investors
JEL Classification: G21, G32, E44
Suggested Citation: Suggested Citation