Contractual Savings, Capital Markets, and Firms' Financing Choices

Contractual Savings, Capital Markets, and Firms' Financing Choices

The authors analyze the relationship between the development and asset allocation of contractual savings and firms' capital structures. The authors develop a simple model of firms' leverage and debt maturity decisions. They illustrate the...

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Bibliographic Details
Main Authors: Impavido, Gregorio, Musalem, Alberto R., Tressel, Thierry
Format: Policy Research Working Paper
Language:English
en_US
Published: World Bank, Washington, DC 2014
Subjects:
ADVERSE SELECTION
ASSET BACKED SECURITIES
ASSET MANAGEMENT
ASYMMETRIC INFORMATION
BALANCE SHEET
BALANCE SHEETS
BANK LOANS
BANK RUNS
BANKING SECTOR
BANKING SYSTEM
BANKRUPTCY
BANKS
BENCHMARK
BONDS
BORROWING
CAPITAL FLOWS
CAPITAL MARKETS
CAPITALIZATION
COMPARATIVE ADVANTAGE
CONTAGION
CONTRACTUAL SAVINGS INSTITUTIONS
CORPORATE GOVERNANCE
COST OF CAPITAL
COUNTRY COMPARISONS
DEBT
DEVELOPMENT STRATEGIES
DISCOUNTED VALUE
DIVIDENDS
ECONOMIC STABILITY
ECONOMIES OF SCALE
EMPIRICAL EVIDENCE
EQUILIBRIUM
EQUITY CAPITAL
EQUITY INVESTMENTS
EQUITY MARKETS
EXPECTED RETURN
EXPROPRIATION
EXTERNAL FINANCING
FACE VALUE
FINANCIAL ASSETS
FINANCIAL CRISIS
FINANCIAL DEEPENING
FINANCIAL INSTITUTIONS
FINANCIAL RESOURCES
FINANCIAL SECTOR
FINANCIAL STRUCTURE
FINANCIAL STRUCTURES
FINANCIAL SYSTEMS
FOREIGN CURRENCY
FUTURE CASH FLOWS
GDP
GOVERNMENT BONDS
HEDGE FUNDS
HOUSING
INSURANCE
INSURANCE INDUSTRY
INTEREST RATE
INVESTMENT BANKS
LIQUID ASSETS
LIQUIDATION
LIQUIDATION VALUE
LIQUIDITY
MACROECONOMIC MANAGEMENT
MACROECONOMIC STABILITY
MARKET POWER
MONETARY POLICIES
MORAL HAZARD
MUTUAL FUNDS
PERFECT INFORMATION
POLICY MAKERS
PORTFOLIO
PORTFOLIOS
PRESENT VALUE
PRIVATE INFORMATION
PRODUCTIVE ASSETS
PROFITABILITY
PROPERTY RIGHTS
PUBLIC DEBT
RETIREMENT
RISK PREMIUM
SAVINGS
SAVINGS BEHAVIOR
SECURITIES
SECURITIES MARKETS
SHAREHOLDERS
SHORT TERM DEBT
STOCK MARKETS
TECHNOLOGICAL FACTORS
TERM FINANCE
TRADING SYSTEMS
TRANSACTION COSTS
TRANSPARENCY
Online Access:http://documents.worldbank.org/curated/en/2001/06/2873678/contractual-savings-capital-markets-firms-financing-choices
http://hdl.handle.net/10986/19653
Description
Summary:The authors analyze the relationship between the development and asset allocation of contractual savings and firms' capital structures. The authors develop a simple model of firms' leverage and debt maturity decisions. They illustrate the mechanisms through which contractual savings development may affect corporate financing patterns. In the empirical section, the authors show that the development and asset allocation of contractual savings have an independent impact on firms' financing choices. Different channels are identified. In market-based economies, an increase in the proportion of shares in the portfolio of contractual savings leads to a decline in firms' leverage. In bank-based economies, instead, an increase in the size of contractual savings is associated with an increase in leverage and debt maturity in the corporate sector

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