Optimal debt maturity and firm investment
| Autor: | Joachim Jungherr, Immo Schott |
|---|---|
| Rok vydání: | 2021 |
| Předmět: |
Economics and Econometrics
media_common.quotation_subject 05 social sciences Recourse debt Debt-to-GDP ratio Financial system External debt Debt service ratio Debt 0502 economics and business 8. Economic growth Economics Debt ratio Internal debt 050207 economics Debt levels and flows 050205 econometrics media_common |
| Zdroj: | Review of Economic Dynamics. 42:110-132 |
| ISSN: | 1094-2025 |
| Popis: | We introduce long-term debt and a maturity choice into a dynamic model of production, firm financing, and costly default. Long-term debt saves roll-over costs but increases future leverage and default rates because of a commitment problem. The model generates rich distributions of maturity choices, leverage ratios, and credit spreads across firms. It explains why larger and older firms borrow at longer maturities, have higher leverage, and pay lower credit spreads. Firms' maturity choice matters for policy: A financial reform which increases investment and output in a standard model of short-term debt can have the opposite effect in a model with short-term debt and long-term debt. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
|
Full Text from ScienceDirect