Monetary policy and regional availability of debt financing
Research output: Journal Publications and Reviews (RGC: 21, 22, 62) › 21_Publication in refereed journal › peer-review
Author(s)
Detail(s)
| Original language | English |
|---|---|
| Pages (from-to) | 439-458 |
| Journal / Publication | Journal of Monetary Economics |
| Volume | 60 |
| Issue number | 4 |
| Online published | 23 Apr 2013 |
| Publication status | Published - May 2013 |
| Externally published | Yes |
Link(s)
Abstract
The relative availability of bond and bank financing should affect the firm's external financing and investment decisions. We define a measure that proxies for the regional borrowing inflexibility to substitute between bank and bond financing: “debt inflexibility”. Debt inflexibility tilts the firm's financial structure towards equity and reduces investment. The impact is stronger during the period of tight monetary policy, particularly for smaller firms and firms without banking relationships. Debt inflexibility increases the sensitivity of cash holdings to cash flows, reduces the likelihood of dividend payment and makes the firm more likely to pay equity in mergers and acquisitions. @2013 Elsevier B.V. All rights reserved.
Research Area(s)
- Monetary policy, Debt inflexibility, Financial constraints, Capital structure, Cash flow sensitivity
Citation Format(s)
Monetary policy and regional availability of debt financing. / Massa, Massimo; Zhang, Lei.
In: Journal of Monetary Economics, Vol. 60, No. 4, 05.2013, p. 439-458.
In: Journal of Monetary Economics, Vol. 60, No. 4, 05.2013, p. 439-458.
Research output: Journal Publications and Reviews (RGC: 21, 22, 62) › 21_Publication in refereed journal › peer-review
