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The Financing Structure of NonFinancial Corporations and MacroFinancial Implications in France

Author

Listed:
  • Stéphane Dees
  • Stefan Gebauer
  • Thomas Goncalves
  • Camille Thubin

Abstract

How does the corporate funding mix affect economic and financial stability in France? To address this question, we develop a model for the financing structure of French non-financial corporations (NFCs) and incorporate it in the Banque de France's semi-structural macroeconomic model (FR-BDF). We document that while on average more than half of external financing for French NFCs is provided by bank credit, the share of bond financing has increased markedly after the great Financial Crisis of 2008/2009. We then use the augmented model to simulate several macro-financial stress scenarios and show that the new macro-financial linkages imply a non-negligible financial accelerator effect that affects corporate investment decisions and matters for the transmission of monetary policy. In particular, corporate leverage plays a key role for investment, and we discuss the relative strength of shocks affecting the leverage ratio via corporate credit and equity.

Suggested Citation

  • Stéphane Dees & Stefan Gebauer & Thomas Goncalves & Camille Thubin, 2022. "The Financing Structure of NonFinancial Corporations and MacroFinancial Implications in France," Working papers 880, Banque de France.
    • Handle: RePEc:bfr:banfra:880
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    More about this item

    Keywords

    Semi-Structural Models; Non-Financial Corporation Financing; Corporate Debt.;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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