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Identifying Determinants of the Cost of Long Term Borrowing for U.S. Firms: Insights for Management

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  • Cebula, Richard
  • McGrath, Richard

Abstract

Long term corporate planning and the effective pursuit of profits require, among other things, an understanding by management of the factors that influence the cost of borrowing. This study empirically identifies key factors that influence the cost of borrowing for U.S. firms, which cost is measured in the present study by the interest rate yield on Moody's Baa-rated corporate bonds. Identification of these factors is essential knowledge in order for firm management to be able to anticipate to at least some degree both current and future trends in the cost of borrowing to finance capital formation

Suggested Citation

  • Cebula, Richard & McGrath, Richard, 2006. "Identifying Determinants of the Cost of Long Term Borrowing for U.S. Firms: Insights for Management," MPRA Paper 49647, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:49647
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    References listed on IDEAS

    as
    1. McMillin, W. Douglas, 1986. "Federal deficits and short-term interest rates," Journal of Macroeconomics, Elsevier, vol. 8(4), pages 403-422.
    2. Mascaro, Angelo & Meltzer, Allan H., 1983. "Long- and short-term interest rates in a risky world," Journal of Monetary Economics, Elsevier, vol. 12(4), pages 485-518, November.
    3. Hoelscher, Gregory, 1986. "New Evidence on Deficits and Interest Rates," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 18(1), pages 1-17, February.
    4. Cebula, Richard J, 1988. "Federal Government Budget Deficits and Interest Rates: An Empirical Analysis for the United States, 1955-1984," Public Finance = Finances publiques, , vol. 43(3), pages 337-348.
    5. James R. Barth & George Iden & Frank S. Russek, 1984. "Do Federal Deficits Really Matter?," Contemporary Economic Policy, Western Economic Association International, vol. 3(1), pages 79-95, September.
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    More about this item

    Keywords

    long term cost of borrowing; firms costs; management insights;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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