Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/152747
Authors: 
de Bondt, Gabe
Marqués-Ibáñez, David
Year of Publication: 
2004
Series/Report no.: 
ECB Working Paper 313
Abstract: 
This study empirically examines the development of the high-yield segment of the corporate bond market in the United States, as a pioneer country, and the United Kingdom and the euro area, as later adopting countries. Estimated diffusion models show for the United States a significant pioneer influence factor and autonomous speed of diffusion. The latter is found to be higher in Europe than in the United States as also macroeconomic factors are considered. The high-yield bond diffusion pattern is significantly affected by financing need variables, e.g. leverage buy-outs, mergers and acquisitions, and industrial production growth, and return or financing cost variables, e.g. stock market return and the spread between the yield on speculative-grade and BBB-rated investment-grade bonds. These findings suggest that the diffusion of new financial products depends on the macroeconomic environment and can be quickly in case of the diffusion from a pioneer country to later adopting countries.
Subjects: 
diffusion models
financial innovation
high-yield bond market
JEL: 
G32
E44
Document Type: 
Working Paper

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