External funding for US companies: Supplementary to loans and securities, or Alternative? (Part 1)

 

KODE : 1764

overview : “Multiple mediation” (Greenspan 2000)

Financing through corporate loans and corporate bonds facilitates the flow of external funds. Holmstrom and

Tirole (1997) emphasizes complementarity. Bank financing and consistent monitoring for most companies Essential for bond raising. 

Their model-based econometric studies are consistent with:

Averages over time and during the financial crisis, and complementarity across both levels

Volatility. This means that 'multiple options' may not be an effective buffer for bank lending.

The crisis and the resulting supply-side disruption of bank lending can affect real activity. there is

It has important implications for regulation, especially Basel II. 

Non-technical overview

“Multiple Arbitration Instruments” – availability of debt issuance

Corporate and bank loans – currently only available in parts of the OECD

Countries. The advantages of such a choice are described by Greenspan (1999,

2000) who suggested having banks or bonds would help protect the US economy

The market suffered financial difficulties as the unaffected market tried to offset the contraction of supply-side credit caused by the crisis market. Continued development of securities Markets and proposes debt financing and “multiple routes” possibilities.

It will grow in importance around the world in the coming years.

Traditional mediation theory emphasizes alternatives along with 'multiple pathways'

Between loans and securities. However, Holmstrom and Tirole (1997) emphasize this.

Complementarity between bank lending (informed) and securities lending (uninformed). Complementarity suggests more complex patterns than simply considering multiple pathways.

In particular, questions have arisen as to whether bond issuance can fully replace bank lending.

The banking system is underpresure. We are looking for evidence of such complementarity in the United States. We chose the United States because it is the most important country

Examples of countries with active private bond markets and banks. under

Simultaneously estimate the Rohn equation using the Holmström and Tirole theoretical model

and bond financing. The dependent variable is both money and (by some estimates).

The volatility of real cash flows. These provide a basic pattern for testing complementarity.

Between direct and indirect borrowing. Also evaluate using dummy variables

Whether there are off-cycle effects from the financial crisis. 

We show that the US bond and banking markets behave strongly according to the following theory.

Emphasize complementarity between bank lending and bond issuance, not the other way around

In the first and second moments. They also noted that stock values ​​have changed significantly.

Impact on corporate financing choices. In addition, there are significant deviations from the crisis

Regular fundraising behavior is observed, consistent with the model's predictions.

A credit crunch (affecting direct lending) and a savings crunch (affecting bond issuance).

directly). Only in the latter case can 'other markets' supplement with new inflows

Financing. Consistent with this, the estimation of the multivariate GARCH model suggests so.

Bank lending volatility has a positive impact on bond volatility, but a bond shock dampens volatility

Bank lending volatility. 

Our research suggests that "multiple paths" is not a simple replacement problem. Securities

Issuance will struggle as it needs to make up for the decline in bank lending Pre-bond bank oversight for many corporate sectors. important policy As a result, financial regulation and market failures increase volatility. Bank lending will also lead to further destabilization of corporate finance. In this context,The proposed amendments to the 1988 Basel Accord have received widespread criticism, including:This could make bank lending more cyclical. Our research suggests that this is the case

This will limit the extent to which affected companies can issue corporate bonds. 

Prologue

"Multiple mediation methods" for companies - wide availability

Bond issuance and bank borrowing are sources of foreign bond financing

Currently only available in some OECD countries (especially USA and Canada).

Shown in Davis (2001). Alan emphasized the advantages of such a choice

Greenspan (1999, 2000) suggested that "a few paths" could help defend the United States

An economy in a time when banks or bond markets were hit by a financial crisis

problem. For example, in 1990-1991 and 1998 he proposed that unaffected markets should be moved into the future.

Combat supply-side lending declines due to crisis markets. By preventing

When major funding shortfalls occur, the macroeconomic impact of financial turmoil continues.

Reduced. Constant development of the securities market and growth of institutional investors

Investors point out that debt financing and a “multiple means” option would make that possible.

It will grow in importance around the world in the coming years. For example follow this

Logically, after the 1997-1998 crisis, Asian countries were encouraged to establish bond markets.

Crisis (Knight 1998). Business lending in the Eurozone also appears to be strong

From the development of the bond market 

Traditional Mediation Theory and the “Multiple Channels” ApproachStress substitution between loans and securities. As recent theoretical research,Holmstrom and Tirole (1997) overemphasized the complementarity of banks (informants).Securities lending for companies in peacetime and crisis (no information provided).Complementarity can exhibit more complex patterns than simply displaying multiples.street. In particular, the question arises as to whether bond issuance can fully replace banks.

Lending when the banking system is in crisis.In this context, the purpose of this document is to collect evidence on credit and credit complementarity.

Securities in external borrowing markets across the US company sector conditions. We chose the United States because it is a prime example of a country with active private debt.

Stock market and bank. Empirical specifications are based on theory

Holmstrom and Tirole's model of mediation and borrowable funds (ibid.). our

The empirical method consists of estimating the loan and loan determinant equations simultaneously.

Debt financing for the corporate sector. The dependent variable is both amount and amount

(For some estimates) the volatility of real money flows. These give the basic pattern

Examination of complementarity between direct borrowing and indirect borrowing. in this frame 

Traditional Arbitration Theory and Multiple Channel ApproachesStress substitution between loans and securities. According to recent theoretical studies,Holmstrom and Tirole (1997) overemphasized the complementarity of banks (informants).Corporate securities lending in peacetime and crisis (no information).Complementarity can involve more complex patterns than simply showing multiples.

city. In particular, the question arises whether bond issuance can completely replace banks.

Lending when the banking system is in crisis.

In this context, the purpose of this document is to collect evidence of credit and credit support.

External credit market securities across the US corporate sectorconditions. The United States was chosen because it is a prime example of a country with active private debt. stock market and bank. Empirical specifications are based on theory Holmström and Tyrolean Mediation Model and Borrowing Means (Id.). our An empirical method is to estimate the credit equation and the credit determinant equation simultaneously.Debt financing for the company sector. The dependent variable is both amount and quantity(by some estimates) the volatility of real money flows. These form the basic pattern

Examine the complementarity of direct and indirect borrowing. within this frame 

Dummy variables can also be used to assess crises, as suggested by Greenspan.

The duration of whether there are off-cycle effects that could lead to a financial crisis

A blockade of the supply side of the affected market and a shift of funding in opposition to it.

untouched market. This result is also consistent with the complementarity of bank loans.

Bond issuance has been average over the long term and during the financial crisis, suggesting that:

Multiple passes may not be an effective buffer if banks are in a credit crunch. there is

These have a significant impact on bank capital requirements.

The work is organization as follows. Section 2 provides a selective theoretical introduction.

Issues of external funding and selection of credit bonds. Section 3 provides an overview of:

The Holmstrom-Tirole model is the basis of our empirical study, and in section 4 we

We provide an overview of existing empirical studies on bond selection. Section 5 considers the empirical.cash flow variables, other macroeconomic variables, and

Financial crisis, its facilitation is considered. Section 6 presents the experimental infomation.

We present the specifications and present the main empirical results. Section 7 draws conclusions.