Download or read book Debt Maturity a Survey written by S. Abraham Ravid and published by . This book was released on 1996 with total page 78 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Debt Maturity and the Use of Short Term Debt written by Sophia Chen and published by International Monetary Fund. This book was released on 2019-02-05 with total page 77 pages. Available in PDF, EPUB and Kindle. Book excerpt: The maturity structure of debt can have financial and real consequences. Short-term debt exposes borrowers to rollover risk (where the terms of financing are renegotiated to the detriment of the borrower) and is associated with financial crises. Moreover, debt maturity can have an impact on the ability of firms to undertake long-term productive investments and, as a result, affect economic activity. The aim of this paper is to examine the evolution and determinants of debt maturity and to characterize differences across countries.

Download or read book The Maturity Structure of Debt written by Fabio Schiantarelli and published by World Bank Publications. This book was released on 1997 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Debt Maturity and Firm Performance written by Fabio Schiantarelli and published by . This book was released on 2016 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: Is long-term debt better than short-term debt in its effect on firm performance? The answer appears to be yes for privately owned companies in India.Economic policymakers traditionally hold the view that, because of imperfections in capital markets, a shortage of long-term finance acts as a barrier to industrial performance and growth. Long-term finance is thought to allow firms to invest in more productive technologies, even when they do not produce immediate payoffs, without the fear of premature liquidation. As a result, special state-supported term-lending institutions have been established, especially in developing countries.But some believe that short-term finance may offer better incentives because it allows suppliers of finance to monitor and control firms more effectively, thus improving the firms' performance.Schiantarelli and Srivastava empirically investigate the determinants and consequences of the term structure of debt. Using a rich panel of data on privately owned companies in India, they also examine the influence of debt maturity structures on those firms` performance, especially on productivity.The results are not conclusive, but seem to support conventional beliefs about the importance of long-term finance to firm performance. Heavy leveraging, however, has a strong negative impact on productivity.They base their econometric evidence on estimates of a maturity equation and of a production function augmented by financial variables.The data on which these results are based have been generated by a financial system in which there is little competition, in which state-owned financial institutions are not guided by the profit motive and have no control over interest rates, so one cannot say whether short term finance would have been more beneficial in a less regulated system.Moreover, by the end of the 1980s, the capital base of India's government-owned financial institutions had been severely eroded and they carried a heavy burden of nonperforming assets. This means that the benefits of long term finance must be weighed against the costs.This paper - a product of the Finance and Private Sector Development Division, Policy Research Department - was prepared for the conference Firm Finance: Theory and Evidence held on June 14, 1996. The study was funded by the Bank`s Research Support Budget under research project Term Finance (RPO 679-62).

Download or read book The Debt Burden and Debt Maturity written by Alessandro Missale and published by . This book was released on 1991 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Maturity Structure of Debt Determinants and Effects on Firms Performance Evidence from the United Kingdom and Italy written by Fabio Schiantarelli and published by . This book was released on 1999 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: January 1997 Firms tend to match assets with liabilities, and more profitable firms have more long-term debt. Long-term debt has a positive effect on firms' performance, but this is not true when a large fraction of that debt is subsidized. The authors empirically investigate the determinants and consequences of the maturity structure of debt, using data from a panel of UK and Italian firms. They find that in choosing a maturity structure for debt, firms tend to match assets and liabilities, as both conventional wisdom and some recent theoretical models suggest. They conclude that more profitable firms (as measured by the ratio of cash flow to capital) tend to have more long-term debt. This finding is consistent with the dominant role played by firms' fear of liquidation and loss of control associated with short-term debt. It may also reflect the willingness of financial markets to provide long-term finance only to quality firms. The data do not support the hypothesis that short-term debt, through better monitoring and control, boosts efficiency and growth -rather, the opposite can be concluded. In both countries, the data suggest a positive relationship between initial debt maturity and the firms' subsequent medium-term performance (i.e., profitability and growth in real sales). In both countries total factor productivity (TFP) depends positively on the length of debt maturity when the maturity variable is entered both contemporaneously and lagged. But in Italy the positive effect of the length of maturity on productivity is substantially reduced or even reversed when the proportion of subsidized credit increases. The authors document the relationship between firms' characteristics and their choice of shorter or long-term debt by estimating a maturity equation and interpreting the results in light of insights from theoretical literature, and by analyzing the effects of maturity on firms' later performance in terms of profitability, growth, and productivity; assess how TFP depends on the degree of leverage and the proportion of longer and shorter-term debt; and analyze the relationship between firms' debt maturity and investment. This paper--a product of the Finance and Private Sector Development Division, Policy Research Department--is part of a larger effort in the department to study the effects of financial structure on economic performance. The study was funded by the Bank's Research Support Budget under the research project Term Finance: Theory and Evidence (RPO 679-62).

Download or read book Debt Maturity Risk and Asymmetric Information written by and published by . This book was released on 2004 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: "We test the implications of Flannery's (1986) and Diamond's (1991) models concerning the effects of risk and asymmetric information in determining debt maturity, and we examine the overall importance of informational asymmetries in debt maturity choices. We employ data on over 6,000 commercial loans from 53 large U.S. banks. Our results for low-risk firms are consistent with the predictions of both theoretical models, but our findings for high-risk firms conflict with the predictions of Diamond's model and with much of the empirical literature. Our findings also suggest a strong quantitative role for asymmetric information in explaining debt maturity"--Abstract.

Download or read book Asset Maturity Debt Covenants and Debt Maturity Choice written by Gautam Goswami and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The existing research on debt-maturity under asymmetric information has focused on the impact of differential information regarding asset quality on the debt maturity decision. This research has generally indicated the optimality of short-term debt financing as a vehicle of mitigating the adverse selection problem. In this paper, we consider the impact of information asymmetry regarding the maturity structure of cash flows on the debt maturity decision. We demonstrate that, in this context, long-term debt is generally the form of debt financing most effective in alleviating the adverse selection problem. We also show that costs of adverse selection may induce some mismatching of debt maturity and asset maturity in the presence of significant transaction costs.

Download or read book Fact Or Fiction Shortening Debt Maturity Lowers Interest Costs written by Thomas J. Sargent and published by . This book was released on 1993* with total page 116 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book A National Survey of State Debts and Securities written by Bank of America (New York, N.Y.) and published by . This book was released on 1925 with total page 94 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Corporate Debt Maturity Choice written by Lina I. Sharara-Taher and published by . This book was released on 1994 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Unlike the extensive literature on the more general topic of capital structure, empirical research in the corporate debt maturity area is still scant. Related studies had formulated theoretical justifications for the observed cross-sectional multiplicity of debt maturities without a parallel concern in empirical research and to date, little empirical work has been conducted to test those formulations. In this context, this paper makes a major contribution in that it attempts to explain how corporate debt maturity choice is determined. At the core of this study is a general multiple choice model that makes it possible to examine how the different hypotheses on debt maturity advanced thusfar determine that choice. Using an ordered model as opposed to a simple model had the advantage of capturing the segmentation in the debt maturity market while allowing a gain in efficiency for the parameter estimates. The results from this model lend strong support to the hypothesis that, overall, when choosing the maturity of a new debt, corporate managers seek to minimize the agency costs of debt in general, especially those from the incentive for wealth expropriation by investing in riskier projects than originally anticipated. The evidence is also consistent with the assumption that managers do commit themselves not to transfer wealth from bondholders to stockholders by attaching protective covenants to the newly issued debt. Finally, the model's classificatory ability is tested for meaningfulness by comparing it to the proportional chance model.

Download or read book A National Survey of State Debts and Securities written by Bank of America (New York, N.Y.) and published by . This book was released on 1922 with total page 90 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Debt Maturity Without Commitment written by Dirk Niepelt and published by . This book was released on 2008 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Debt Maturity Structure and Liquidity Risk written by Douglas Warren Diamond and published by . This book was released on 1989 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Maturity of Debt Issues and Predictable Variation in Bond Returns written by Malcolm P. Baker and published by . This book was released on 2013 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: The maturity of new debt issues predicts excess bond returns. When the share of long-term debt issues in total debt issues is high, future excess bond returns are low. This predictive power comes in two parts. First, inflation, the real short-term rate, and the term spread predict excess bond returns. Second, these same variables explain the long-term share, and together account for much of its own ability to predict excess bond returns. The results are consistent with survey evidence that firms use debt market conditions in an effort to determine the lowest-cost maturity at which to borrow.

Download or read book Systematic Risk Debt Maturity and the Term Structure of Credit Spreads written by Hui Chen and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We build a dynamic capital structure model to study the link between firms' systematic risk exposures and their time-varying debt maturity choices, as well as its implications for the term structure of credit spreads. Compared to short-term debt, long-term debt helps reduce rollover risks, but its illiquidity raises the costs of financing. With both default risk and liquidity costs changing over the business cycle, our calibrated model implies that debt maturity is pro-cyclical, firms with high systematic risk favor longer debt maturity, and that these firms will have more stable maturity structures over the cycle. Moreover, pro-cyclical maturity variation can significantly amplify the impact of aggregate shocks on the term structure of credit spreads, especially for firms with high beta, high leverage, or a lumpy maturity structure. We provide empirical evidence for the model predictions on both debt maturity and credit spreads.

Download or read book An Empirical Test of the Debt Maturity Structure Irrelevance Proposition written by Lucy J. Reuben and published by . This book was released on 1984 with total page 17 pages. Available in PDF, EPUB and Kindle. Book excerpt: