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We build a dynamic capital structure model to study the link between systematic risk exposure and debt maturity, as well as their joint impact on the term structure of credit spreads. Our model allows for time variation and lumpiness in the maturity structure. Relative to short-term debt, long-term debt is less prone to rollover risks, but its illiquidity raises the costs of financing. The risk premium embedded in the bankruptcy costs causes firms with high systematic risk to favour longer debt maturity, as well as a more stable maturity structure over the business cycle. Pro-cyclical debt maturity amplifies the impact of aggregate shocks on the term structure of credit spreads, especially for firms with high leverage or high beta, and for firms with a large amount of long-term debt maturing when the aggregate shock arrives. However, endogenous maturity choice can also reduce and even reverse the effect of rollover risk on credit spreads. We provide empirical evidence for the model predictions on both debt maturity and credit spreads., À l’aide d’un modèle dynamique de la structure de capital, les auteurs étudient le lien entre l’exposition des entreprises au risque systématique et l’échéance de leur dette, ainsi que les incidences conjointes de ces deux facteurs sur la structure par terme des écarts de crédit. Dans leur modèle, la structure des échéances peut varier dans le temps et être irrégulière. Les obligations à long terme sont moins sensibles au risque de refinancement que les titres à court terme, mais leur illiquidité a pour effet d’alourdir les coûts d’emprunt. La prime de risque intégrée aux coûts de faillite amène les firmes très exposées au risque systématique à préférer une dette à plus long terme et une structure des échéances plus stable sur le cycle économique. La procyclicité des échéances amplifie les répercussions des chocs globaux sur la structure par terme des écarts de crédit, surtout dans le cas des entreprises fortement endettées ou dont les titres affichent un bêta élevé et de celles qui ont un volume considérable d’obligations à long terme échéant au moment du choc global. Cependant, le choix endogène de l’échéance peut également atténuer, voire inverser, les effets du risque de refinancement sur les écarts de crédit. Les auteurs testent empiriquement la validité des prévisions de leur modèle concernant l’échéance de la dette et les écarts de crédit.

This paper provides the first evidence on gender differences in investment financing, credit application and credit denial rates in Germany. The empirical analysis is carried out on a sample of firms drawn from the KfW Mittelstandspanel, a representative survey of German SMEs for the period from 2003 to 2009. Our results suggest that in female-owned firms the share of internal capital in investment financing is higher and the share of external funds is lower than for male-owned firms. An analysis of the supply- and demand-side on the credit market shows that women are not more likely to be denied credit but the probability that they apply for credit is on average lower. Yet, this gender difference in the probability of credit application is only evident when considering firms with negative or neutral sales expectations. There is no significant gender difference in credit application rates of firms with positive sales expectations.

Rajan and Zingales (1998) use U.S. Compustat firm data for the 1980s to obtain measures of manufacturing sectors? Dependence on External Finance (DEF). They take any differences in these measures to be structural/technological and thus applicable to other countries. Their joint assumptions about how to obtain representative values of DEF by sector and about why these values differ fundamentally between sectors have been adopted in additional studies seeking to show that sectors benefit unequally from a country?s level of financial development. However, the assumptions as such have not been examined. The present study, conducted with cyclically adjusted annual measures of DEF derived from U.S. industry data for 1977-1997, attempts to do so using data that are aggregated by sector. We find that those variables that may be regarded as structural/ technological have very low explanatory power, and that the DEF figures calculated from micro data do not correspond closely to what is obtained from aggregate figures. Hence key assumptions on which RZ's argumentation is based could not be validated.

The paper analyses the potential impact of stock market developments on lending behaviour from different perspectives. First we scrutinize the impact of stock market movements on the banks' and on the borrowers' balance sheets. Subsequently we estimate aggregate credit supply and demand functions including a stock market indicator as explanatory variable. The analysis reveals no major importance of the bank balance sheet channel for the relationship between stock market volatility and corporate financing possibilities of non-financial companies. A possible impact of stock market movements on banks' lending behaviour might be rooted in their impact on the balance sheets of corporate borrowers. The empirical results of the credit market analysis yield some confirming evidence for an impact of stock market developments. However, the results are not very stable and depend on the specification of the model and on the time period under observation.

CEE countries such as Poland started to experience a very high rate of financial development within a few years after emerging from socialism. A review of the literature suggests that this asymmetric development should have been most beneficial for those industry sectors most dependent on external finance. However, the widelyused Rajan and Zingales (1998) measure of young (exchange-listed U.S.) companies' dependence on external finance had no explanatory power for the structure of industry growth in Poland. This negative finding held for 1990-2001 as a whole and for two distinct sub-periods that differed in the speed of financial development. Reasons for this failure, and correlates of the RZ measure, are examined.

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.

While the negative qualitative relation between the cost of debt capital and firm age is rather well established in the financial economics literature, there are few, if any, quantitative estimates available of the magnitude of the age effect. This study analyses this effect by utilizing a large dataset of Finnish firms. The data consists of 56432 firms and 119259 observations from 2000-2002. Our fixed-effect estimations show that for small businesses, the effect of getting older on the cost of debt finance is economically large: The semi-elasticity of the cost of debt capital is from 3 to 4.5 percent. That is, the cost of debt capital is about 30-45% higher for a new firm than it is for the same firm when it reaches middle-age (i.e., when it is about ten years old). We also find that the cost of debt capital is higher for young firms even after (changes in) observable creditworthiness, as measured by a commercial credit score, is controlled for. We conclude that the return to maturing one more year is not negligible in the market for small business (debt) finance. Yritysrahoituskirjallisuudessa esitetään usein, että kun yritys vanhenee ja vakiintuu, sen ulkoisen rahoituksen kustannukset laskevat. Tämän ”ikä-vaikutuksen” suuruutta ei kuitenkaan ole juurikaan yritetty mitata. Tässä tutkimuksessa analysoidaan ikä-vaikutusta käyttäen laajaa suomalaista yritystason aineistoa. Aineisto kattaa kaikkiaan 56432 suomalaista yritystä, joista käytössämme on yhteensä 119250 havaintoa vuosilta 2000-2002. Tutkimuksen tulokset osoittavat, että yrityksen iän vaikutus rahoituskustannuksiin on taloudellisesti merkittävä: Estimointitulostemme mukaan aloittelevan yrityksen rahoituskustannukset saattavat olla keskimäärin jopa noin 30-45 prosenttia korkeammat kuin kymmenen vuotta vanhan yrityksen. Tämä tulos löytyy, vaikka analyysissa otetaan huomioon ns. ei-havaittavat yrityskohtaiset tekijät (fixed effects) ja mm. luottoluokitusyhtiön arvio yritysten luottokelpoisuudesta.

The present paper first discusses theoretically the different incentives of manager- versus owner-controlled firms for investment into innovative activity. In addition, the role of debt financing is analyzed. Subsequently the results from an empirical study on the determinants of innovative activity measured by patent applications are presented. A sample of German firms covering 2,793 observations is used, and it turns out that companies with widely held capital stock are more active in innovation, i.e. weakly controlled managers show a higher innovation propensity. However, the higher the leverage the more disciplined the managers are.

Financial theory creates a puzzle. Some authors argue that high-risk entrepreneurs choose debt contracts instead of equity contracts since risky but high returns are of relatively more value for a loan-financed firm. On the contrary, authors who focus explicitly on start-up finance predict that entrepreneurs are the more likely to seek equity-like venture capital contracts, the more risky their projects are. Our paper makes a first step to resolve this puzzle empirically. We present microeconometric evidence on the determinants of debt and equity financing in young and innovative SMEs. We pay special attention to the role of risk for the choice of the financing method. Since risk is not directly observable we use different indicators for financial and project risk. It turns out that our data generally confirms the hypothesis that the probability that a young high-tech firm receives equity financing is an increasing function of the financial risk. With regard to the intrinsic project risk, our results are less conclusive, as some of our indicators of a risky project are found to have a negative effect on the likelihood to be financed by private equity.