Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/208247
Authors: 
Popov, Alexander
Barbiero, Francesca
Wolski, Marcin
Year of Publication: 
2018
Series/Report no.: 
ECB Working Paper 2213
Abstract: 
Using a pan-European dataset of 8.5 million firms, we find that firms with high debt overhang invest relatively more than otherwise similar firms if they are operating in sectors facing good global growth opportunities. At the same time, the positive impact of a marginal increase in debt on investment efficiency disappears if firm debt is already excessive, if it is dominated by short maturities, and during systemic banking crises. Our results are consistent with theories of the disciplining role of debt, as well as with models highlighting the negative link between agency problems at firms and banks and investment efficiency.
Subjects: 
Investment efficiency
Debt overhang
Banking crises
JEL: 
E22
E44
G21
H63
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-3318-6
Document Type: 
Working Paper

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