How does long-term finance affect economic volatility?
Copyright policy )How does long-term finance affect economic volatility?
In an approach analogous to Rajan and Zingales (1998), we examine how the ability to access long-term debt affects firm-level growth volatility. We find that firms in industries with stronger preference to use long-term finance relative to short-term finance experience lower growth volatility in countries with better-developed financial systems, as these firms may benefit from reduced refinancing risk. Institutions that facilitate the availability of credit information and contract enforcement mitigate refinancing risk and therefore growth volatility associated with short-term financing. Increased availability of long-term finance reduces growth volatility in crisis as well as non-crisis periods.
- Economic Policy Institute United States
- University of Bristol United Kingdom
- World Bank United States
- Tilburg University Netherlands
- Economic Research Centre Azerbaijan
firm volatiliy, Financial development, INVESTMENT, TOTAL DEBT, INTERMEDIATION, SHAREHOLDERS, finanical dependence, DEPOSIT, LIQUIDATION, INSTITUTIONAL DEVELOPMENT, DEPOSIT INSURANCE, INVESTMENTS, STOCK, RETURNS, COLLATERAL, BONDS, FINANCIAL MARKET, TRANSACTIONS, MORAL HAZARD, ACCOUNTING STANDARDS, TRANSPARENCY, MARKET CAPITALIZATION, MORTGAGE, FINANCIAL MARKETS, CORPORATE INVESTMENT, SHORT-TERM DEBT, BORROWERS, DEPOSITS, ASSETS RATIO, Debt maturity, MARKETS, CREDITORS, BUSINESS CYCLE, CREDIT AVAILABILITY, BALANCE SHEET, INVESTOR PROTECTION, MONETARY POLICY, LIQUIDITY, SMALL BUSINESS, GUARANTEES, AVAILABILITY OF CREDIT, MARKET, LONG-TERM INVESTMENTS, GOVERNMENT POLICIES, DOMESTIC CREDIT, DEBTS, CASH FLOW, LIQUIDITY RISKS, BOND FINANCING, debt maturity, TREASURY BILLS, FIXED ASSETS, OPTIMAL CONTRACTS, BANKING MARKET, MACROECONOMIC STABILITY, BANKRUPTCY, POLITICAL ECONOMY, LENDERS, /dk/atira/pure/core/keywords/af_banking; name=AF Banking, DEBT RATIO, STANDARD DEBT CONTRACTS, MONETARY AUTHORITIES, LIABILITY, GOOD, CREDIT BUREAUS, BOND MARKET, CREDIT TRANSACTIONS, BOND, PRIVATE CREDIT, DEBT SECURITIES, SAVINGS DEPOSITS, DEBT FINANCING, FINANCIAL STUDIES, MACROECONOMIC INSTABILITY, RISK PROFILES, BANK CREDIT, FINANCIAL DEVELOPMENT, DEVELOPING COUNTRIES, MATURITY, SECURITIES, FUTURE, STOCK RETURNS, CASH RESERVES, MARKET FAILURES, CENTRAL BANKS, REPAYMENT, DEVELOPMENT BANK, INVESTOR, CONTRACTS, ASSET VALUE, CAPITALIZATION, CONSTRAINTS, CREDIT MARKETS, Financial dependence, LIQUIDITY RISK, MARKET DATA, DEBTORS, CREDIT MARKET, financial development, VALUATION, MATURITY STRUCTURE, STOCK MARKET, BANKING SYSTEM, SHORT- TERM FINANCE, CAPITAL STRUCTURE, INTERNATIONAL SETTLEMENTS, MATURITIES, Firm volatility, CRISIS, LENDING, SAFETY NETS, BAILOUT, INVESTING, SHORT-TERM FINANCE, /dk/atira/pure/core/keywords/af_banking, FINANCIAL CRISIS, COSTLY STATE VERIFICATION, DEBT MATURITY, POLITICAL STABILITY, RESERVES, FIRM, LOANS, GROWTH, LIQUIDITY CONSTRAINTS, CHECK, 330, DEPOSIT MONEY BANKS, LOANABLE FUNDS, FINANCE, FINANCIAL FRAGILITY, BUSINESS CYCLES, EXTERNAL DEBT, LIABILITIES, MARKET VALUE, LEGAL RIGHTS, LONG-TERM FINANCE, DEBT CONTRACTS, INTEREST RATE RISK, DEBT, VALUE OF ASSETS, PROVISION OF CREDIT, COMPETITIVE MARKETS, MACROECONOMIC VOLATILITY, OWNERSHIP STRUCTURE, CONTRACT ENFORCEMENT, FIRM PERFORMANCE, ECONOMIC DEVELOPMENT, RETURN, LONG-TERM DEBT, MATURITY STRUCTURES, LONG-TERM ASSETS, CORPORATE DEBT, MATURITY MATCHING, CREDIBILITY, CREDIT CONSTRAINTS, EXCHANGE, ACCOUNTING, MARKET DEVELOPMENT, CREDIT INFORMATION, LONG- TERM DEBT, RISK-FREE RETURN, name=AF Banking, INSURANCE, EQUITY, TREASURY, BANK LOANS, ENFORCEMENT OF CONTRACTS, POSITIVE COEFFICIENTS, BOND MARKET DEVELOPMENT, EXPENDITURES, INTERNATIONAL BANK, BANKRUPTCY LAWS, CONTRACT, STOCK MARKETS, DISCLOSURE STANDARDS, SHORT- TERM DEBT, TRADE CREDITS, POSITIVE COEFFICIENT, INTEREST, EXTERNAL FINANCE, ACCOUNTS RECEIVABLE, LEGAL FRAMEWORK, LONG TERM DEBT, CASH FLOWS, CHECKS, SHARE, INTEREST RATE, LIQUIDITY MANAGEMENT, EQUITY SECURITIES, EXPENDITURE
firm volatiliy, Financial development, INVESTMENT, TOTAL DEBT, INTERMEDIATION, SHAREHOLDERS, finanical dependence, DEPOSIT, LIQUIDATION, INSTITUTIONAL DEVELOPMENT, DEPOSIT INSURANCE, INVESTMENTS, STOCK, RETURNS, COLLATERAL, BONDS, FINANCIAL MARKET, TRANSACTIONS, MORAL HAZARD, ACCOUNTING STANDARDS, TRANSPARENCY, MARKET CAPITALIZATION, MORTGAGE, FINANCIAL MARKETS, CORPORATE INVESTMENT, SHORT-TERM DEBT, BORROWERS, DEPOSITS, ASSETS RATIO, Debt maturity, MARKETS, CREDITORS, BUSINESS CYCLE, CREDIT AVAILABILITY, BALANCE SHEET, INVESTOR PROTECTION, MONETARY POLICY, LIQUIDITY, SMALL BUSINESS, GUARANTEES, AVAILABILITY OF CREDIT, MARKET, LONG-TERM INVESTMENTS, GOVERNMENT POLICIES, DOMESTIC CREDIT, DEBTS, CASH FLOW, LIQUIDITY RISKS, BOND FINANCING, debt maturity, TREASURY BILLS, FIXED ASSETS, OPTIMAL CONTRACTS, BANKING MARKET, MACROECONOMIC STABILITY, BANKRUPTCY, POLITICAL ECONOMY, LENDERS, /dk/atira/pure/core/keywords/af_banking; name=AF Banking, DEBT RATIO, STANDARD DEBT CONTRACTS, MONETARY AUTHORITIES, LIABILITY, GOOD, CREDIT BUREAUS, BOND MARKET, CREDIT TRANSACTIONS, BOND, PRIVATE CREDIT, DEBT SECURITIES, SAVINGS DEPOSITS, DEBT FINANCING, FINANCIAL STUDIES, MACROECONOMIC INSTABILITY, RISK PROFILES, BANK CREDIT, FINANCIAL DEVELOPMENT, DEVELOPING COUNTRIES, MATURITY, SECURITIES, FUTURE, STOCK RETURNS, CASH RESERVES, MARKET FAILURES, CENTRAL BANKS, REPAYMENT, DEVELOPMENT BANK, INVESTOR, CONTRACTS, ASSET VALUE, CAPITALIZATION, CONSTRAINTS, CREDIT MARKETS, Financial dependence, LIQUIDITY RISK, MARKET DATA, DEBTORS, CREDIT MARKET, financial development, VALUATION, MATURITY STRUCTURE, STOCK MARKET, BANKING SYSTEM, SHORT- TERM FINANCE, CAPITAL STRUCTURE, INTERNATIONAL SETTLEMENTS, MATURITIES, Firm volatility, CRISIS, LENDING, SAFETY NETS, BAILOUT, INVESTING, SHORT-TERM FINANCE, /dk/atira/pure/core/keywords/af_banking, FINANCIAL CRISIS, COSTLY STATE VERIFICATION, DEBT MATURITY, POLITICAL STABILITY, RESERVES, FIRM, LOANS, GROWTH, LIQUIDITY CONSTRAINTS, CHECK, 330, DEPOSIT MONEY BANKS, LOANABLE FUNDS, FINANCE, FINANCIAL FRAGILITY, BUSINESS CYCLES, EXTERNAL DEBT, LIABILITIES, MARKET VALUE, LEGAL RIGHTS, LONG-TERM FINANCE, DEBT CONTRACTS, INTEREST RATE RISK, DEBT, VALUE OF ASSETS, PROVISION OF CREDIT, COMPETITIVE MARKETS, MACROECONOMIC VOLATILITY, OWNERSHIP STRUCTURE, CONTRACT ENFORCEMENT, FIRM PERFORMANCE, ECONOMIC DEVELOPMENT, RETURN, LONG-TERM DEBT, MATURITY STRUCTURES, LONG-TERM ASSETS, CORPORATE DEBT, MATURITY MATCHING, CREDIBILITY, CREDIT CONSTRAINTS, EXCHANGE, ACCOUNTING, MARKET DEVELOPMENT, CREDIT INFORMATION, LONG- TERM DEBT, RISK-FREE RETURN, name=AF Banking, INSURANCE, EQUITY, TREASURY, BANK LOANS, ENFORCEMENT OF CONTRACTS, POSITIVE COEFFICIENTS, BOND MARKET DEVELOPMENT, EXPENDITURES, INTERNATIONAL BANK, BANKRUPTCY LAWS, CONTRACT, STOCK MARKETS, DISCLOSURE STANDARDS, SHORT- TERM DEBT, TRADE CREDITS, POSITIVE COEFFICIENT, INTEREST, EXTERNAL FINANCE, ACCOUNTS RECEIVABLE, LEGAL FRAMEWORK, LONG TERM DEBT, CASH FLOWS, CHECKS, SHARE, INTEREST RATE, LIQUIDITY MANAGEMENT, EQUITY SECURITIES, EXPENDITURE
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