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 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

Bibliographic Details

Main Authors:	Impavido, Gregorio, Musalem, Alberto R., Tressel, Thierry
Format:	Policy Research Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2001-06
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
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