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Bank supply shocks and the substitution between bank and nonbank debt

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  • Fernández, Ana I.
  • González, Francisco
  • Suárez, Nuria

Abstract

We identify the effect of the bank credit shock of the 2007–2009 crisis on corporate debt structure by analyzing the substitution of bank debt with nonbank debt (both private and public). Using firm-level data in 34 countries, we find that nonbank credit partially substitutes bank loans in bank-dependent firms after the onset of the global financial crisis. However, there are differences across countries depending on creditor rights and information sharing among creditors. Strong creditor protection in bankruptcy increases the reduction in bank debt whereas a collateral regime favors substitution with private nonbank debt. Information sharing favors substitution with public debt.

Suggested Citation

  • Fernández, Ana I. & González, Francisco & Suárez, Nuria, 2018. "Bank supply shocks and the substitution between bank and nonbank debt," Journal of Corporate Finance, Elsevier, vol. 48(C), pages 122-147.
  • Handle: RePEc:eee:corfin:v:48:y:2018:i:c:p:122-147
    DOI: 10.1016/j.jcorpfin.2017.10.010
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    More about this item

    Keywords

    Banking crises; Capital structure; Creditor rights; Credit registries;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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