Journal ArticleDOI
Bank Loan Supply, Lender Choice, and Corporate Capital Structure
TLDR
In this paper, the authors explored the relevance of capital market supply frictions for corporate capital structure decisions and studied the effect on firms' financial structures of two changes in bank funding constraints: the 1961 emergence of the market for certificates of deposit, and the 1966 Credit Crunch.Abstract:
This paper explores the relevance of capital market supply frictions for corporate capital structure decisions. To identify this relationship, I study the effect on firms' financial structures of two changes in bank funding constraints: the 1961 emergence of the market for certificates of deposit, and the 1966 Credit Crunch. Following an expansion (contraction) in the availability of bank loans, leverage ratios of bank-dependent firms significantly increase (decrease) relative to firms with bond market access. Concurrent changes in the composition of financing sources lend further support to the role of credit supply and debt market segmentation in capital structure choice.read more
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Book ChapterDOI
Endogeneity in Empirical Corporate Finance1
Michael Roberts,Toni M. Whited +1 more
TL;DR: In this paper, applied researchers in corporate finance can address endogeneity concerns, including omitted variables, simultaneity, and measurement error, and discuss a number of econometric techniques aimed at addressing endogeneity problems, including instrumental variables, difference-in-differences estimators, regression discontinuity design, matching methods, panel data methods, and higher order moments estimators.
Journal ArticleDOI
Back to the Beginning: Persistence and the Cross‐Section of Corporate Capital Structure
TL;DR: This paper found that the majority of variation in leverage ratios is driven by an unobserved time-invariant effect that generates surprisingly stable capital structures: high (low) levered firms tend to remain as such for over two decades.
Journal ArticleDOI
Corporate Debt Maturity and the Real Effects of the 2007 Credit Crisis
TL;DR: This article used a difference-in-differences matching estimator approach to find that firms whose long-term debt was largely maturing right after the third quarter of 2007 cut their investment to capital ratio by 2.5 percentage points more (on a quarterly basis) than otherwise similar firms whose debt was scheduled to mature after 2008.
Posted Content
Does Credit Competition Affect Small-Firm Finance?
TL;DR: The authors found that in states more open to branching, small firms borrow at interest rates 25 to 45 basis points lower than firms operating in less open states, and that firms in open states also were more likely to borrow from banks.
References
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Journal Article
The Cost of Capital, Corporation Finance and the Theory of Investment
TL;DR: In this article, the effect of financial structure on market valuations has been investigated and a theory of investment of the firm under conditions of uncertainty has been developed for the cost-of-capital problem.
Posted ContentDOI
Credit Rationing in Markets with Imperfect Information.
Joseph E. Stiglitz,Andrew Weiss +1 more
TL;DR: In this paper, a model is developed to provide the first theoretical justification for true credit rationing in a loan market, where the amount of the loan and amount of collateral demanded affect the behavior and distribution of borrowers, and interest rates serve as screening devices for evaluating risk.
Journal ArticleDOI
How Much Should We Trust Differences-In-Differences Estimates?
TL;DR: In this article, the authors randomly generate placebo laws in state-level data on female wages from the Current Population Survey and use OLS to compute the DD estimate of its "effect" as well as the standard error of this estimate.
Journal ArticleDOI
Financial Intermediation and Delegated Monitoring
TL;DR: In this paper, the authors developed a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders, and presented a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary.
Journal ArticleDOI
What Do We Know about Capital Structure? Some Evidence from International Data
Raghuram G. Rajan,Luigi Zingales +1 more
TL;DR: In this paper, the authors investigate the determinants of capital structure choice by analyzing the financing decisions of public firms in the major industrialized countries and find that factors identified by previous studies as correlated in the cross-section with firm leverage in the United States, are similarly correlated in other countries as well.
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What Do We Know about Capital Structure? Some Evidence from International Data
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