Corporate Debt Structure and the Financial Crisis

Arbeitspapier

We present a DSGE model where firms optimally choose among alternative instruments of external finance. The model is used to explain the evolving composition of corporate debt during the financial crisis of 2008-09, namely the observed shift from bank finance to bond finance, at a time when the cost of market debt rose above the cost of bank loans. We show that the flexibility offered by banks on the terms of their loans and firms’ ability to substitute among alternative instruments of debt finance are important to shield the economy from adverse real effects of a financial crisis.

Object Details

• ISBN: 978-92-899-1499-4
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 1759

Classification and Topics

• Classification: Wirtschaft ; Business Fluctuations; Cycles ; Financial Markets and the Macroeconomy ; Computable General Equilibrium Models ; Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors
• Subject: corporate debt ; financial crisis ; firms heterogeneity ; risk shocks ; Unternehmensfinanzierung ; Fremdkapital ; Kredit ; Unternehmensanleihe ; Finanzkrise ; Bankenkrise ; DSGE-Modell ; Theorie ; Welt

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): De Fiore, Fiorella ; Uhlig, Harald
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/154192
• Last update: 10.03.2025, 11:43 AM CET