Managerial effect or firm effect: Evidence from the private debt market

2019 ◽  
Vol 55 (1) ◽  
pp. 25-59
Author(s):  
Bill B. Francis ◽  
Iftekhar Hasan ◽  
Yun Zhu
Keyword(s):  
Private Debt ◽  
Debt Market ◽  
Firm Effect

scholarly journals PRIVATE DEBT AND ECONOMIC GROWTH: TRENDS AND CHARACTERISTICS FOR UKRAINE

2021 ◽  
Vol 5 (1) ◽  
pp. 112-120
Author(s):  
L. Shkvarchuk ◽  
◽  
R. Slav`yuk ◽  
Keyword(s):  
Economic Growth ◽  
Private Sector ◽  
Economic Activity ◽  
Direct Method ◽  
Developed Countries ◽  
Gdp Growth ◽  
Economic Downturn ◽  
Private Debt ◽  
Previous Period ◽  
Debt Market

Purpose. The purpose of the article is to determine the effects on economic activity of a pure temporary change in private debt and the relationship between the debt multiplier and the level of economic growth in Ukraine. Design/methodology/approach. In the article, the authors used the function of exponential growth for determining the GDP sensibility to the debt movements. There are also using the Granger approach for determining the direction of the relation between private debt and GPD. Rather than testing whether private debt causes GDP, the Granger causality has tested whether private debt forecasts GDP. The authors provided the calculation in the direct and indirect methods. The model of the direct method was based on the assumption that the GDP growth in the current period depends on the dynamics of GDP and increase of private debt in the previous period. The model of indirect correlation was based on the assumption that the increase of the amounts of private debt depends on the former dynamics of GDP and the amount of private debt accumulated in the previous period. Findings. The hypothesis that the GDP sensibility to the private debt movements is individual for every economy is proven. The households’ debt to GDP ratio and non-financial firms’ debt to GDP ratio for the conditions of economy of Ukraine is one of the lowest in Europe, which proves the low attractiveness of debt financing of the private sector growth. The authors show that elevated private debt sentiment in year t+3 is associated with a rising in economic activity in year t. Such conclusion is fair as for the sensitivity to the households’ debt movements and so to the firms’ debt movements. The increase in private debt causes the insufficient influence on the GDP increasing, so we cannot consider the debt market growth as a stimulator of the economy growth in Ukraine. The authors showed the existence of a relation between the GDP growth and increase of private debt only in indirect model. Private sector debt cycle more correlated with the business cycles: in the case of GDP growth the private debt rises also. But, the strength of influence of the GDP growth on the private debt growth is temperate: while the increase in the GDP by 1 % in the medium predicts 0.055 % subsequent private debt growth. Practical implications. The debt-growth nexus has received renewed interest among academics and policy makers. The results of this research are of interest to the government in its way of economic reform and generating effective tools to overcome the economic downturn. Also, the findings can help the financial market regulators to realize the effective monetary policy. Originality/value. This study represents a new evidence of relations between private debt and the real economy. In contrast to existing research the authors argued the reality of indirect impact of economical cycles to the private debt dynamic. But, the strength of influence of the GDP growth on the private debt growth is temperate. So it’s wrong to consider the debt market development as a stimulator of the economic growth in Ukraine. In contrast to the developed countries in Ukraine the main part of private debt belongs to firms.

scholarly journals Do audited firms have a lower cost of debt?

2022 ◽  
Author(s):  
Asif M. Huq ◽  
Fredrik Hartwig ◽  
Niklas Rudholm
Keyword(s):  
Financial Statements ◽  
Cost Of Debt ◽  
Sources Of Information ◽  
Private Debt ◽  
High Exposure ◽  
History Of ◽  
Debt Market ◽  
Instrumental Variable Method ◽  
Alternative Sources ◽  
The Cost

AbstractThe purpose of this study is to investigate if audited financial statements add value for firms in the private debt market. Using an instrumental variable method, we find that firms with audited financial statements, on average, save 0.47 percentage points on the cost of debt compared to firms with unaudited financial statements. We also find that using the big, well-known auditing firms does not yield any additional cost of debt benefits. Lastly, we investigate if there are industries where alternative sources of information make auditing less valuable in reducing the cost of debt. Here, we find that auditing is less important in lowering cost in one industry, agriculture, where one lender has a 74% market share and a 100-year history of lending to firms within that industry. As such, it seems that lenders having high exposure to a certain industry might act as an alternative to auditing in reducing the information asymmetry between the firm and the lender.

The impact of global financial crisis on regulation S private debt market

2021 ◽  
Vol 73 ◽  
pp. 231-248
Author(s):  
Yingqi Li ◽  
Usha R. Mittoo ◽  
Xin Yu ◽  
Zhou Zhang
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Private Debt ◽  
Debt Market ◽  
The Impact

Foreign Institutional Ownership and the Choice between Public and Private Debt

2019 ◽  
Vol 18 (2) ◽  
pp. 31-64 ◽  
Author(s):  
Jinshuai Hu ◽  
Albert Kwame Mensah ◽  
Albert Tsang
Keyword(s):  
Public Debt ◽  
Institutional Ownership ◽  
Vital Role ◽  
Cross Sectional ◽  
Private Debt ◽  
Public And Private ◽  
The Public ◽  
New Public ◽  
Accruals Quality ◽  
Debt Market

ABSTRACT The objective of this study is to examine the role of foreign institutional investors (FIIs) in firms' choice of debt. Using a large sample of firms from 40 countries, we find that FIIs are positively associated with the propensity of firms to access the public debt market and the subsequent issuance of new public debt. In contrast, we find no relationship between domestic institutional ownership and public debt. Our results are robust to various specifications, including a 2SLS regression model, a change model, a Heckman two-stage model and propensity score matching model, and a quasi-natural experiment using the exogenous relaxation of foreign equity restrictiveness. Cross-sectional tests further show that findings are stronger for firms with poorer accruals quality, with higher levels of information asymmetry, and firms domiciled in countries with weaker creditor protection. Collectively, our findings suggest that FIIs play a vital role in facilitating firms' public debt financing.

scholarly journals Bank Reputation in the Private Debt Market

2007 ◽  
Author(s):  
Joseph A. McCahery ◽  
Armin Schwienbacher
Keyword(s):  
Private Debt ◽  
Debt Market

scholarly journals Bank reputation in the private debt market

2010 ◽  
Vol 16 (4) ◽  
pp. 498-515 ◽  
Author(s):  
Joseph McCahery ◽  
Armin Schwienbacher
Keyword(s):  
Private Debt ◽  
Debt Market

scholarly journals Bank Reputation in the Private Debt Market

2010 ◽  
Author(s):  
Joseph A. McCahery ◽  
Armin Schwienbacher
Keyword(s):  
Private Debt ◽  
Debt Market

Financial Systems and economic Development in the Russian Regions: A Comparative Analysis

2015 ◽  
pp. 94-108 ◽  
Author(s):  
K. Krinichansky
Keyword(s):  
Economic Development ◽  
Comparative Analysis ◽  
Financial Development ◽  
Public Debt ◽  
Fixed Capital ◽  
Russian Regions ◽  
Growth Mechanisms ◽  
Financial Systems ◽  
Debt Market ◽  
Regions Of Russia

The paper identifies and assesses the closeness of the connection between incremental indicators of the financial development in the regions of Russia with the incremental regional GDP and the investment in fixed capital. It is shown that the positioning of the region as an independent participant of public debt market matters: the regional GDP and investment in fixed capital grow more rapidly in the regions which are regularly borrowing on the sub-federal bonds market. The paper also demonstrates that the poorly developed financial system in some regions have caused the imperfection of the growth mechanisms since the economy is not able to use the financial system’s functions.

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