Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/100929
Authors: 
Berger, Allen N.
Espinosa-Vega, Marco A.
Frame, W. Scott
Miller, Nathan H.
Year of Publication: 
2004
Series/Report no.: 
Working Paper, Federal Reserve Bank of Atlanta 2004-32
Abstract: 
We test the implications of Flannery’s (1986) and Diamond’s (1991) models concerning the effects of risk and asymmetric information in determining debt maturity, and we examine the overall importance of informational asymmetries in debt maturity choices. We employ data from more than 6,000 commercial loans from 53 large U.S. banks. Our results for low-risk firms are consistent with the predictions of both theoretical models, but our findings for high-risk firms conflict with the predictions of Diamond’s model and with much of the empirical literature. Our findings also suggest a strong quantitative role for asymmetric information in explaining debt maturity.
Document Type: 
Working Paper

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