paulrintamaki

Paul Rintamäki

Welcome to my website! I am an Assistant Professor of Finance at Frankfurt School of Finance and Management.

My current research focuses on the behavior of different types of financial intermediaries, both banks and nonbanks. I am also interested in monetary policy transmission. I enjoy combining large and unique datasets, economic theory, and institutional knowledge to explore novel research questions that bridge theory and practice.

Research interests

Financial intermediation, monetary policy transmission, long-run asset returns

paul.rintamaki [at] aalto.fi

PIK Now and Pay Later - How Deferred Interest Reshapes Private Credit (Online Appedix)

We study the role of Payment-in-Kind (PIK) provisions in private credit markets as a substitute for bank-provided liquidity. Using novel loan-level data from U.S. Business Development Companies (BDCs), we show that borrowers without access to bank credit lines often rely on PIK features to manage liquidity shortfalls. These features allow borrowers to defer interest payments, effectively providing contingent financing during periods of distress or high interest rates. We find that PIK usage strongly predicts future credit deterioration, delinquency, and bankruptcy—especially for borrowers lacking private equity sponsors or where lenders do not hold equity claims. A simple model highlights the agency conflicts inherent in deferred interest and identifies contractual mechanisms that mitigate these risks. At the lender level, we show that increased PIK usage constrains BDCs' portfolio and dividend growth and is associated with tighter bank-imposed covenants. Our findings reveal how nonbank lenders adapt liquidity provision and the associated risks to the financial system.