Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/210747
Authors: 
Boyarchenko, Nina
Mueller, Philippe
Year of Publication: 
2019
Series/Report no.: 
Staff Report No. 895
Abstract: 
Productive firms can access credit markets directly by issuing corporate bonds or by borrowing through financial intermediaries. In this paper, we study the cyclical properties of corporate credit provision through these two types of debt instruments in major advanced economies. We argue that the cyclicality of corporate credit is closely related to the cyclicality of the types of financial intermediaries active in the provision of credit. When a debt instrument is held by institutions that manage their balance sheets through debt issuance, credit provision through that instrument is procyclical. But when a debt instrument is held by institutions that manage their balance sheets through equity issuance, credit provision through that instrument is countercyclical. We show that cross-country differences in the cyclicality of corporate credit can be ascribed to differences in the composition of the aggregate financial sector, and not to differences in the balance sheet management practices of each type of financial intermediary.
Subjects: 
intermediated credit
leverage cycles
corporate bonds
JEL: 
G21
G22
G23
G32
Document Type: 
Working Paper

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