Q2. How do the authors control for the structural differences between economies?
The authors also control for the structural differences between economies using country fixed effects and measures of firm size distribution.
Q3. What is the significance of the series xt,k,i?
To test the statistical significance of the bond-loan substitution after peaks, the authors regress the series x̂t,k,i on dummy variables Yj , which are equal to one when t belongs to the year j for the j = [−2;−1; +1; +2] years before or after the peak.
Q4. Why do fewer firms have access to the bond market during bad times?
Because an economic crisis deteriorates the fundamentals of firms, for example their net worth, fewer firms should have access to the bond market leading to a shift from market debt to bank debt during bad times and not the opposite.
Q5. What is the link between corporate debt and recoveries?
The link identified between the corporate debt structure and recoveries may be a by-product of financial booms, which could modify the composition of corporate debt before recession.
Q6. What is the way to check the robustness of the results?
To check the robustness of their results, the columns (4)-(6) of Table 1 report the regression coefficients using the growth rate of series g4x,t,k,i instead of the deviation with respect to the peak value x̂t,k,i .
Q7. What is the correlation between the structure of corporate debt and the growth rate of the financial markets?
Given the substitution between loans and bonds, the dynamics of credit in the economy is determined by the structure of corporate debt.