Debt Maturity And Firm Performance
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Debt Maturity And Firm Performance
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Author : Fabio Schiantarelli
language : en
Publisher: World Bank Publications
Release Date : 1997
Debt Maturity And Firm Performance written by Fabio Schiantarelli and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 1997 with Mercado de capitales - India categories.
Debt Maturity And Firm Performance
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Author : Fabio Schiantarelli
language : en
Publisher:
Release Date : 2016
Debt Maturity And Firm Performance written by Fabio Schiantarelli and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
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).
The Maturity Structure Of Debt
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Author : Fabio Schiantarelli
language : en
Publisher: World Bank Publications
Release Date : 1997
The Maturity Structure Of Debt written by Fabio Schiantarelli and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 1997 with Corporate debt categories.
The Maturity Structure Of Debt Determinants And Effects On Firms Performance Evidence From The United Kingdom And Italy
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Author : Fabio Schiantarelli
language : en
Publisher:
Release Date : 1999
The Maturity Structure Of Debt Determinants And Effects On Firms Performance Evidence From The United Kingdom And Italy written by Fabio Schiantarelli and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1999 with categories.
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).
The Maturity Structure Of Debt
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Author : Schiantarelli
language : en
Publisher:
Release Date : 2013
The Maturity Structure Of Debt written by Schiantarelli and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
Acces To Long Term Debt And Effects On Firms Performance
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Author : Fidel Jaramillo
language : en
Publisher: World Bank Publications
Release Date : 1997
Acces To Long Term Debt And Effects On Firms Performance written by Fidel Jaramillo and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 1997 with Business enterprises categories.
The Maturity Structure Of Debt
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Author : Fabio Schiantarelli
language : en
Publisher:
Release Date : 2016
The Maturity Structure Of Debt written by Fabio Schiantarelli and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
Firms tend to match asset ...
Access To Long Term Debt And Effects On Firms Performance
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Author : Fabio Schiantarelli
language : en
Publisher:
Release Date : 1999
Access To Long Term Debt And Effects On Firms Performance written by Fabio Schiantarelli and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1999 with categories.
February 1997 Does the availability of long-term financing affect a firm's productivity (by facilitating access to more productive technologies) and capital accumulation? Or does the less intense monitoring and the lesser fear of liquidation associated with long-term debt actually reduce productivity? Recent theory increasingly emphasizes the association of short-term debt with higher-quality firms and better incentives. The possibility of premature liquidation, for example, may serve as a disciplinary device to improve firm performance. At the same time the role of long-term debt, especially when it is heavily subsidized, is being rethought because so many development banks are plagued with nonperforming loans and doubts about the selection criteria used in allocating funds. Jaramillo and Schiantarelli explore empirical evidence about the structure of debt maturity in Ecuadorean firms. They discuss how it has been affected by government intervention in credit markets, and by financial liberalization. Using firm-level panel data, they investigate the determinants of access to long-term debt in Ecuador. Finally, they provide evidence about how the maturity structure of debt affects firms' performance, particularly productivity and capital accumulation. They find that: * Long-term debt is very unevenly distributed. Almost 30 percent of firms never have access to it during the period studied. * Large firms are more likely to have access to long term debt than small firms. The former are on average more profitable. * Conditional on size, operating profits do not increase the probability of receiving long-term credit and may actually decrease it. This suggests that the mechanism used to allocate long-term resources in Ecuador may be flawed. * The allocation problem was worse for directed credit. There is some evidenct that, after financial liberalization, the problem was less severe. * There is a strong positive association between asset maturity and debt maturity, a matching of assets and liabilities. * Shorter-term loans are not conducive to greater productivity while long-term loans may lead to improvements in productivity. * While long-term loans may positively affect the quality of capital accumulation, they do not have an impact on the amount of fixed investment. 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).
Debt Maturity And The Use Of Short Term Debt
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Author : Sophia Chen
language : en
Publisher: International Monetary Fund
Release Date : 2019-02-05
Debt Maturity And The Use Of Short Term Debt written by Sophia Chen and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-02-05 with Business & Economics categories.
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.
Non Financial Corporate Debt In Advanced Economies 2010 17
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Author : Luiza Antoun de Almeida
language : en
Publisher: International Monetary Fund
Release Date : 2020-07-03
Non Financial Corporate Debt In Advanced Economies 2010 17 written by Luiza Antoun de Almeida and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020-07-03 with Business & Economics categories.
This paper studies the evolution of non-financial corporate debt among publicly listed companies in major advanced economies between 2010 and 2017. Since 2010, firms have started to rely more on corporate bond markets and have used part of their debt to increase their holdings of cash. In our sample of some 5,000 firms, we find substantial differences across countries, industries, firms, and years in leverage and debt maturity, and we also identify time factors that are common drivers of capital structures. Within countries, loosening an index of financial conditions seems to be associated with lengthening debt maturity after controlling for firms’ characteristics. Across firms and countries, leveraging and lengthening debt maturity have been greater where economic growth was stronger. Tighter financial conditions are positively associated with an increase in short-term debt financing. Quantile regressions suggest that there is substantial heterogeneity among firms on how they react to macro-financial conditions: large increases in long-term debt financing and large declines in short-term debt financing tend to be driven more by better macroeconomic performance, while large increases in short-term debt financing are more strongly impacted by tighter financial conditions. Since the paper uses data up to 2017, it does not reflect developments that occurred during the coronavirus pandemic. Nonetheless, sensitivity analysis shows that a significant amount of corporate debt, representing more than 5 percent of GDP, could be at risk in some countries, with an adverse spillover to the financial system if financial conditions tighten or economic growth slows down. This suggests that vulnerabilities should be closely monitored and policy action taken if warranted.