Corporate Debt Structure and Economic Recoveries

Abstract

We provide a crosscountry study of the business cycle behavior of corporate debt structure for twenty five countries over the period 1989-2013. The substitution of bonds for loans, widely described during the Great Recession, is a general pattern of recoveries. Economies with high bond share and important bond-loan substitution recover from the recessions faster. The interaction between economic recoveries and corporate debt structure is stronger in recessions with banking crisis than in normal récessions. A theoretical model is developed to explain how the bond-loan substitution softens the recession costs.

The Firm Size Distribution across Countries and Skill-Biased Change in Entrepreneurial Technology

“…administrative sources. 9 Table 1 shows a comparison of the firm size distribution in Eurostat to that computed from the GEM, averaging across the 12 countries with comparable data.…”

“…Figure 1, panel B shows the ratio of the number of firms with 50 to 249 employees to that with 250 or more employees, for both Amadeus and Eurostat. Again, 9 See http://ec.europa.eu/eurostat/web/structural-business-statistics for a detailed description. I use 2010 data to maximize country coverage.…”

Ambitions and limits of financial disintermediation in the Euro Area

“…Resorting to capital markets or to non-bank intermediation can then compensate for this fall in bank lending and thus mitigate the impact on investment and business activity. Several recent empirical studies have attempted to show that economic recovery is faster and stronger in economies with more developed capital markets (Allard and Blavy 2011, Gambacorta et al 2014, Grjebine et al 2014. But there might, of course, also have been confounding variables contributing to differential recovery speeds (fiscal and monetary policy, bank resolution etc.…”

Enhancing the financing of the real economy and financial stability in the United Kingdom

“…Net lending to businesses has been falling since 2009, declining more for large businesses than for small and medium-sized enterprises (SMEs) ( Figure 3). Large businesses were able to rely on the bond market that has remained rather healthy during the post-crisis years (Figure 4), but this was not sufficient to substitute for a dramatic fall in bank lending (Grjebine et al, 2014). 12-month growth rates.…”