Corporate Debt Structure, Firm-bank Relationships, Credit Market Frictions
China's Import Penetration and the Crowding-in of Mortgage Loans, Sep 2022
I study how China's trade liberalization affects US manufacturing firms' debt structure and banks' loan allocation. Firms with higher Chinese import penetration decrease the demand for short-term debt after 2001, caused by a permanent drop in inventory. Exposed firms take fewer short-term loans and have lower loan spreads. Banks with a larger fraction of loans to exposed manufacturing firms decrease commercial lending and increase mortgage lending. The reallocation is concentrated in banks with a lower capital ratio and banks with a lower change in capital ratio. My results indicate that China's trade liberalization increases the supply of household debt.
Spring Meeting of Young Economists (SMYE) 2021, FMA Annual Meeting 2021
Cash Holdings and Debt Structure, Jan 2019
with Paolo Colla and Florian Nagler
We empirically examine how corporate cash holdings relate to debt structure, that is, the fraction of bond financing. We find that the relation between cash holdings and bond financing is U-shaped in the cross-section of firms. That is, firms that do not use bond financing or those that are entirely bond financed exhibit the highest cash holdings. The differential in cash holdings due to heterogeneity in bond financing is substantial and amounts up to 20% of assets. Moreover, the intensity of bond financing is also non-linearly related to market-to-book assets, firm size and leverage. We present a model of financial constraints to rationalize these patterns.
FMA European Conference 2019