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Infrastructure has grown rapidly as an alternative asset class, yet many of the complex processes that transform public infrastructures into lucrative financial assets are poorly understood. This article examines investments by an infrastructure debt fund, to show how financial innovations expand and diversify the infrastructure asset class by finding new ways to generate financial returns from infrastructures. Infrastructure debt is an emerging sector of the infrastructure asset class, where private debt funds create assets that generate returns by extending loans or bond financing to physical infrastructures. The analysis uses assetization as a conceptual framework to scrutinise the construction of financial assets, centring the role of rent generation and extraction to show how infrastructure debt funds create financial value. By bringing the performative work of asset construction into dialogue with the political-economic forces enabling rent extraction, the analysis augments existing literature on financialized infrastructures. The findings show how infrastructure debt assets are predicated on multiple rounds of assetization: initially, the essential nature of infrastructure services is exploited to generate and extract monopoly rents as long-term revenue streams, and in turn, debt funds extend claims on these revenue streams to extract rents through interest payments. In this way, infrastructure debt extends the infrastructure asset class and provides a new route to extract rents, raising concerns over the potential of these investment practices to contribute to inclusive regional development and just transitions to mitigate and adapt to climate change. [ABSTRACT FROM AUTHOR]

This is the first study examining the key role played by venture capital and private equity (VCPE) firms in the private debt market. Private debt funds invest in companies owned (sponsored) by VCPEs and in other companies without VCPE sponsors. Using novel data, we find that private debt without VCPE sponsors generates a premium. Further analysis shows that this sponsorless premium compensates for higher risk and costs of risk mitigation as sponsorless lenders adopt a more hands-on approach emulating VCPE sponsors' roles. Our results are robust and provide important lessons for investors and investee firms in private debt, venture lending, and VCPE. This paper was accepted by Victoria Ivashina, finance. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2022.4664. [ABSTRACT FROM AUTHOR]

In recent years, institutional investors have begun diversifying into asset classes previously deemed too complex or high-risk to suit their objectives. While these investments may hold the potential for exceptional returns, they also pose significant challenges from an operations and accounting perspective due to their bespoke nature. This paper explores the diversification trend and investment categories that are attracting attention (and capital) from institutions. It outlines the key operational issues these investments raise, as well as some strategies that can help investors overcome those issues and optimise the benefits of diversification. [ABSTRACT FROM AUTHOR]

Rising debt can threaten macroeconomic, financial, and fiscal stability, and thus fuels uncertainty among economic agents. Therefore, high levels of indebtedness may hinder economic growth especially for those economies with a large debt burden and may also amplify the volatility of GDP growth rates. This can be particularly true when we consider a currency area, such as the European Monetary Union (EMU), whose economies are characterized by different structural features and by political and social instability. In 2019, the private and public debt of the EMU reached 206% and 86% of GDP, respectively. The purpose of this paper is to investigate the relationship between economic growth and debt for the EMU countries during the 2000-2019 period using a two-steps approach. We first provide a breakdown of private and public debt-to-GDP ratios and their changes over time, both at the eurozone-level and at country-level. Then we employ fixed effects panel regression to investigate the relationships between i) real GDP per capita growth and debt, and ii) GDP growth volatility and debt, and to investigate which channels could be responsible for the effects of debt on economic growth. It emerges that debt-to-GDP ratios are linked negatively to economic growth and positively to growth volatility. Some policy implications arise, such as the need to stabilize private and public debt, promote growth, and foster coordination among the policies of the EMU member states.

This paper shows how to uniquely price non-traded assets using no-arbitrage in an otherwise frictionless market setting. The approach requires the assumption that the hedging error, properly defined, is non-priced or idiosyncratic risk. This methodology can be applied to private loans, illiquid publicly traded debt, insurance contacts, private equity, real estate, and real options. [ABSTRACT FROM AUTHOR]

The aim of this article is to examine debt and currency vulnerability during economic turbulence in the Global South. A panel data analysis is performed on a panel of 25 economies consisting of nine developed and 16 developing countries with a focus on public and private debt. The empirical findings reveal that only public debt build‐up has an adverse effect on currency value. There is no evidence of a significant impact of recession periods on currency value for both private and public debt estimations. I also found that private debt build‐up can be more harmful than public debt in developing countries. In addition, both public and private debt have increased as percentages of GDP during COVID‐19. [ABSTRACT FROM AUTHOR]

The US recovery from the 1920–21 recession has been presented as a triumph of laissez-faire policies and a serious challenge to Keynesian economics. This study interrogates this claim by using previously unutilised data and examines the historical development of the early 1920s recession and recovery. The study refutes the laissez-faire view and shows that the recovery indeed fits Keynes's perspective. The deflationary recession was largely engineered by the Federal Reserve a la 1980s Volker disinflation. The recovery closely followed the reversal of tight monetary policy and was propelled by exceptionally long pent-up private consumption and residential spending. The recovery initiated the Roaring Twenties boom of weakened organised labour, rising income inequality and mounting private debt. This private debt-led boom proved unsustainable and was fraught with risks that contributed to the severity of the Great Depression. Although the recovery was not driven by fiscal policy, it cannot be seen as driven by price flexibility either. [ABSTRACT FROM AUTHOR]

This study examines whether bank lenders react differently to various types of real transaction management (RTM) by borrowing firms. Drawing upon the differential cash and cash flow effects of alternative forms of RTM, we predict and find that banks provide more favorable loan terms, that is, lower interest spread and reduced likelihood of required collateral, for firms reporting more discretionary reductions in research and development (R&D) expenditures. In contrast, lending banks respond unfavorably to borrowers' engagement in RTM through aggressive sales discounts and overproduction of inventories. Additional analysis reveals that the favorable effect of discretionary R&D reductions on loan pricing is greater (smaller) for borrowing firms with a prior relationship with the bank or with a lower level of cash holdings (loans with longer maturity). Overall, our findings suggest that banks, with their unique payoff functions and monitoring incentives, do not view all forms of RTM negatively. [ABSTRACT FROM AUTHOR]

This study examines the effects of populism on household debt in 30 countries. Using a newly developed database of populist leaders, we observe that populism has a significantly negative effect on household debt, that is, households tend to hold less debt when populist leaders are in office than when non-populist ones are in office. We explore potential channels for this phenomenon. We observe that left-wing populism diminishes household debt by reducing household consumption while right-wing populism diminishes household debt by increasing public debt. Both types of populism decrease household debt by reducing lenders' willingness to lend. Overall, our results suggest that populism is an important factor in explaining household debt dynamics. [ABSTRACT FROM AUTHOR]

This paper uses a panel vector autoregressive model to study the differential effects of components of private debt on income growth for a large panel of countries. While household debt growth in a given period generally has a positive impact on income, this effect is much stronger for countries with relatively lower levels of income and household debt-to-GDP ratios. On the other hand, the responsiveness of income growth to an increase in corporate debt varies across countries, with a consistently negative impact in richer and/or more heavily indebted countries. A simple extension of our framework suggests the roles of investment and consumption spending in explaining the varying effects of household and corporate debt on growth. We carry out several exercises to illustrate the robustness of our results. [ABSTRACT FROM AUTHOR]

The simultaneous recording of public surplus with current account deficit in a national economy could be related to strong private leverage that usually ends in financial crisis, what would make the public surplus unsustainable. The objective of this work is to check the extent to which this claim is bolstered by empirical support. The results reveal that, in effect, the concurrence of public surpluses and current account deficits is associated with private leverage processes and financial crises. These outcomes question the design of the current fiscal rules since they don’t pay attention to the current account balance.

The COVID-19 pandemic has triggered a massive increase in global debt levels and exacerbated the trade-offs between the benefits and costs of accumulating government debt. This paper examines these trade-offs by putting the recent debt boom into a historical context. It reports three major findings. First, during the 2020 global recession, both global government and private debt levels rose to record highs, and at their fastest single-year pace, in five decades. Second, the debt-financed, massive fiscal support programs implemented during the pandemic supported activity and illustrated the benefits of accumulating debt. However, as the recovery gains traction, the balance of benefits and costs of debt accumulation could increasingly tilt toward costs. Third, more than two-thirds of emerging market and developing economies are currently in government debt booms. On average, the current booms have already lasted three years longer, and are accompanied by a considerably larger fiscal deterioration, than earlier booms. About half of the earlier debt booms were associated with financial crises in emerging market and developing economies. [ABSTRACT FROM AUTHOR]

Over the past years, developing countries have increased their borrowing from international private creditors. So far, however, little is known about the effect of public debt owed to international private creditors (private debt) on economic growth in developing countries. This paper analyzes the effects of private debt and its main components (i.e., commercial loans, and bond finance) on economic growth. Using panel data over 1970–2017 and covering 70 low -and middle-income countries, the paper finds a positive and significant effect of private debt on GDP per capita growth rate. Private debt appears to stimulate economic growth mainly by improving the efficiency of investment rather than its volume. However, there are differential effects: bond finance has a positive effect, while the effect of commercial loans on growth is negative. The paper discusses the policy implications of the main findings. [ABSTRACT FROM AUTHOR]

Throughout recent history, the Spanish economy registered a fiscal surplus only between 2005 and 2007. Analysts agree that this surplus was a product of the extraordinary economic growth, but they often fail to notice that it was based on similarly exceptional growth in private debt, which was a necessary condition for achieving fiscal surplus. This finding can be illuminated from the vantage of sectoral balances: in economies that usually run a current account deficit, such as Spain's, a public surplus can be achieved only in situations characterized by a credit bubble. To verify this idea we examine the impact that the Spanish real estate and credit bubble had on public accounts, and we also estimate an econometric model of autoregressive vectors. The results corroborate the working hypothesis: Spain's only fiscal surplus in recent years was achieved thanks to the largest private indebtedness process in the country's history. This evidence could have important implications in terms of economic policy, because economies with regular current account deficits such as Spain could have difficulties in achieving their fiscal goals without experiencing credit booms. [ABSTRACT FROM AUTHOR]

We investigate whether the societal-level social capital enjoyed by firms affects the cost of their bank loans. Employing a measure of societal-level social capital for U.S. counties, we find that firms with higher societal-level social capital are associated with lower loan spreads. To further identify causality, we explore two events: Using a sample of firms that relocate their headquarters for tax reasons, we find that firms that move to lower (higher) social capital counties experience a higher (lower) cost of bank loans following relocations. The second event was the terrorist attack on September 11, 2001. After the disaster, social capital in affected counties—mainly in the State of New York, the State of Virginia, and adjacent counties—increased through social capital building efforts. We show that firms headquartered in the affected counties experience significantly lower loan spreads than other firms after the attack. Our findings contribute to the understanding of how societal-level social capital promotes economic development through its impact on financing costs. [ABSTRACT FROM AUTHOR]

Debts have risen rapidly since the global financial crisis. While the literature acknowledges that rapid debt buildups can harm the economy and exacerbate recessions, their impact on currency vulnerability is still empirically under-investigated. This study examines how public and private debt buildups are related to currency depreciation pressure by analyzing the evidence from 59 advanced and emerging markets. Our results suggest that both private and public debt exacerbates currency vulnerability, but the effect of private debt is more robust and consistently significant. We also find that excessive private debt buildup is more harmful in emerging markets, and greater dependence on external financing exacerbates the impact of debt buildup on currency stress. Overall, the evidence highlights the importance of a comprehensive debt surveillance framework that monitors both public and private debt buildup, especially in emerging markets. [ABSTRACT FROM AUTHOR]

In the years 2021-2022, world inflation has drastically increased. The analyses of the main characteristics of the 2007-2009 financial crisis and of the economic crisis caused by the COVID-19 pandemic as well as of the rise in total debt of the non-financial sector suggest that the growth in inflation was triggered by excessive debt growth of the government sector in 2020-2021. In that period, the main goal of the debt growth of the government sector was to finance the aid schemes limiting the negative effects of the COVID-19 pandemic. These aid programmes were indispensable to avoid deep and long-term global economic recession, however, their value was too high to keep inflation in the world under control. The fiscal intervention of particular countries should be co-ordinated internationally, as the cumulative result of the operations undertaken by particular states might have detrimental effects globally. [ABSTRACT FROM AUTHOR]

The rapid accumulation of private debt is widely viewed as a major risk to financial and economic stability. This article systematically and comprehensively assesses the effect of private debt buildup on economic growth. In the spirit of the existing study that separately examines the effects of two types of private debt – household debt and corporate debt – on growth in advanced economies, we specifically provide new evidence on the growth-private debt nexus in both advanced and emerging market economies (EMEs). Moreover, we construct financial peaks in terms of the speed of debt accumulation rather than crisis dates and find that in both advanced and EMEs, corporate debt buildups cause more financial peaks than household debt buildups. Furthermore, corporate debt-induced financial recessions inflict a bigger damage on output than household debt-induced financial recessions in EMEs. Overall, our evidence suggests that policymakers would do well to closely monitor not only household debt but also corporate debt. [ABSTRACT FROM AUTHOR]

[Display omitted] • Private debt can affect MSW from output efficiency of debt and debt effect. • The output efficiency of debt promotes decoupling and its role increases. • Generation intensity effect was the dominant factor for MSW generation. • MSW classification policy as a long-term measure can greatly improve decoupling. • Negative population growth will worsen decoupling while inhibiting MSW growth. As one type of debt 'borrowed' from nature, municipal solid waste (MSW) can be influenced by financing debt. Taking China as an example, an improved Logarithmic Mean Divisia Index (LMDI) model, together with the Tapio decoupling model, is developed to analyze the impact of private debt on MSW generation and the relationship between MSW and economic growth. The results show that the debt-income ratio promotes MSW generation and the output efficiency of debt inhibits MSW generation. Second, the linkage relationship between GDP growth and MSW shows three states: strong decoupling, expansion coupling and weak decoupling. The MSW generation per unit of GDP and the output efficiency of debt are the main contributors to the change of decoupling state. Third, implementing a MSW classification measure can greatly reduce the quantity of MSW removed and transported and improve the decoupling state. By 2035, deleveraging scenario and economic growth slowdown scenario can reduce MSW removal and transportation quantities by 765 and 1080 million tons, respectively. It is worth noting that negative population growth worsens decoupling while curbing MSW. The results provide a new perspective for the realization of MSW reduction and some sound policies are formulated to improve MSW management. [ABSTRACT FROM AUTHOR]

The problems of formation of the company’s capital structure to date have already been studied well. A large number of theoretical papers and empirical studies devoted to this issue have been published. However, managers are confronted not only with the question of the optimal balance between equity and debt capital, but also with the choice of debt structure in the presence of several of its sources, such as public and private debt. This is a new paradigm in corporate finance. On the one hand, companies are not always ready to issue listed securities at the initial stages of their activity. On the other hand, raising funds in open markets has several advantages. With the help of public debt, one can attract a sufficiently large amount of financial resources with a lower cost in comparison with private borrowing. At the same time, as a rule, the public debt is not secured by the assets in the proper amount.According to the author’s opinion, in dealing with this question, companies can take into account not only the current state of the company and its financial indicators, but also the stages of the life cycle, since each of them has its own development features. The purpose of this study is to analyze whether life cycle stages and other financial indicators of a company affect the choice of a source of borrowed capital (private or public debt), thereby to contribute to the development of this research direction. The objects of study are Russian companies. In the empirical part of the study, the binary choice model had been applied.The sample size is 1,818 companies, the financial statements for three years were used. The stages of the organization’s life cycle were calculated by the method of V. Dickinson. A number of control variables were also included in the model. The results of empirical analysis indicate that the company decides to issue public debt, regardless of the stage of the life cycle. This allows us to conclude that the company, when conceptually resolving the question about the structure of borrowed capital, relies on economic indicators such as profitability, size of the company, structure of assets and financial leverage. Understanding this fact can also help potential investors in making investment decisions to form conservative portfolios.

This paper investigates the degree of persistence of the private debt-to-GDP ratio in 43 OECD countries by estimating the fractional integration parameter of each series. Almost all of them are found to be highly persistent, with orders of integration around or above 1. The only exception is Argentina, where the series appears to be mean-reverting. These results highlight the key importance of macroprudential policy as one of the pillars of macro policy. [ABSTRACT FROM AUTHOR]

This paper explores the dynamics of public and private debt in Ghana for the past 32 years. Ghana’s total public debt stock to Gross Domestic Product (GDP) ratio has remained above the 60.0% sustainability threshold recommended by the West Africa Monetary Zone (WAMZ) since 2013. Implemented bank reforms in the country show an upward trend for domestic credit to private sector by banks as a percentage of GDP. Using exploratory review approach, the paper identified fiscal dominance, cost of borrowing, deterioration in export earnings, ineffective fiscal, monetary and debt management policies coordination as factors responsible for changes in total public debt stock. On the other hand, increased domestic borrowings by government from the banks, and Deposit Money Banks’ (DMBs)’ adverse selection in private sector credit allocation affect changes in domestic credit to the private sector by banks. Of these causes, fiscal dominance is the major determinant of public and private debt in Ghana. The study, therefore, recommends that government should pursue fiscal operations that are necessary to put public debt on a declining path. In addition, effective coordination of fiscal, monetary and debt management policies need to be strengthened together with the autonomy of the Bank of Ghana in the use of its monetary policy instruments.

Albania has managed to maintain a positive economic growth and macroeconomic stability over the past decade, but its high level of public debt, with an increasing trend over the last three years, has been seen as very worrying in the eyes of many domestic and foreign economists. When it comes to debt, both public and private debt must be taken into account. Private debt analysis takes on particular importance because private debt is associated with financing business projects and increasing consumer demand, which serve economic growth and improve the country's macro- economic parameters. This paper aims to study the role of public and private debt on economic growth in Albania for the period 2014-2018, as well as the main determinants of these two indicators. The methodology used is based on econometric regression analysis. The results showed that public and private debt has a statistically significant impact on economic growth in Albania. The research question of this paper is: Does private and public debt have an impact on economic growth in Albania? [ABSTRACT FROM AUTHOR]

This paper investigates the effectiveness of fiscal policies – as measured by the impact and cumulative multipliers – and how they interact with public and private debt. Harnessing the moderated panel regression approach, based on the yearly data set of several economies during the period from 1996 to 2012, the analysis is focused on the impact of spending-and-revenue-based fiscal policies on economic growth and how these fiscal instruments interact with public and private indebtedness. The result of spending stimuli advocates the basic Keynesian theory. An increase in public expenditures contemporaneously generates a positive multiplier, of around 0.29 – 0.44 and around 0.45 – 0.58 during two years. Decomposing the expenditures into their elements, this paper documents a stronger impact from public investment than that from government purchases. On the other hand, the revenue stimuli seem to follow the Ricardian Equivalence Hypothesis (REH), arguing that current tax cuts are inconsequential. The impact and cumulative multipliers for this fiscal instrument have mixed results, ranging from -0.21 to 0.05 and -0.26 to 0.06, respectively. Moreover, no robust evidence is found to support the argument that government debt moderates the effectiveness of fiscal policies. The size of the multipliers for both spending and revenue policies remain constant with the level of public debt. On the other hand, private debt appears to show a statistically significant moderating effect on spending stimuli. Its impact on spending multipliers, however, is economically insignificant. The moderation effect of private debt on the revenue stimuli does not seem to exist. Finally, this paper documents that both public and private debt exhibit a negative and statistically significant estimation for economic output.

The role of public banks in financing necessary investment is discussed with reference to a causal framework linking public and private expenditure in sequential time. The text starts by looking at lending to the public and private sector in Europe and develops a simple interpretation of it, which is used to discuss the causes of the recent financial crisis. The evidence shows that the recent financial crisis cannot be imputed to excessive public debt but possibly only to the fast accumulation of private debt. These facts can be interpreted in terms of a simple causality structure where public expenditure determines the level of economic activity. If causality can run from public to private expenditure, the role of public banks in the creation of new savings becomes potentially important because, being part of the public sector, they can play also an indirect role as monetary financial intermediaries, in addition to their traditional role as nonmonetary financial intermediaries recycling savings already accumulated in the past. The article discusses these two possible roles of public banks with reference to some examples. The case of investment for climate change mitigation shows that both roles are important for the pursuit of public policy goals. If only the traditional nonmonetary intermediary role is retained, in the absence of other incentives, the level of environmental investment risks being limited to that portion of the necessary investment that the market considers profitable, i.e., it would probably be insufficient to reduce the climate change risks. In the best variant, these necessary environmental investments would be realized at the expense of other necessary public investment. If, on the contrary, environmental investment is to be realized without reducing other necessary public investments, public banks should engage also in monetary financial intermediary's activities aimed at creating new wealth. The text concludes by describing briefly the main logical consequences of the analysis developed. [ABSTRACT FROM AUTHOR]

This study investigates the extent to which the GDP response to a monetary shock depends on the variation of private debt. This is the marginal contribution of private debt, an effect discussed in the financial accelerator literature. We study the USA, the UK, and Germany in the period 1980 (q1) to 2015 (q4), and compare household debt with corporate debt. Our approach is based on the comparison of one baseline structural VAR with an alternative counterfactual VAR for each country. Our findings indicate that household debt has a significant effect on real output, while corporate debt does not seem to exert a systematic influence. (JEL codes: O11, O16, O51, O52, and E44). [ABSTRACT FROM AUTHOR]

Abstract Using panel data of 17 OECD countries for 1980–2011, we find that the distributional consequences of fiscal consolidations depend significantly on the level of private indebtedness. Austerity leads to a strong and persistent increase in income inequality during periods of private debt overhang. In contrast, there are no discernible distributional effects when private debt is low. This result is robust to alternative identifications of fiscal consolidations, to different ways of defining periods of private debt overhang, and to controlling for the state of the business cycle and the level of government debt. We explore different channels through which our findings can be rationalized. [ABSTRACT FROM AUTHOR]

In the recent last decade, politicians, economists, media, are frequently discussing about Euro area survival, macroeconomic convergence or divergence, stabilization policies, economic cycles, fiscal space, austerity, debt consolidation, fiscal crisis, structural reforms etc. But these debates did not stop the sovereign debt defaults neither the escalating growth of private debt in the world and in European Monetary Union countries. The literature points out that some of the main causes of European sovereign debt crisis are pre and post financial crisis events, the real estate market bubbles and poor public policies in some European Union countries. The specialists are still unable to fully understand and predict sovereign debt crises and the implications of debt accumulation in private sector. Thus, beyond a historical incursion based on some case studies, the present article intends to draw a series of lessons detached from the analysis of the European debt crisis, trying to clarify what is the basis of a contagion trend at Euro area level regarding indebtness, what is the connection between public and private debt and what can be done regarding the indebtness macroeconomic policy in order to ensure a smooth passage along the economic cycle. [ABSTRACT FROM AUTHOR]

Trends in public and private debt are raising concerns among policy makers in Nigeria. In view of recent debt relief and various bank reforms, economists wonder if trends in public and private debt are negatively affecting financial and macroeconomic stability even when authorities are achieving or close to achieving set macroeconomic objectives. In this regard, this paper explores the dynamics of public and private debt in Nigeria, using an exploratory review approach, while also appraising their success and failure for the past 37 years. The study findings reveal that continuous fiscal dominance, cost of borrowing, deterioration in export earnings, and fiscal and monetary policies coordination contributed largely to significant changes in total public debt portfolio. Fiscal dominance and Deposit Money Banks' (DMBs) adverse selection in private sector credit allocation largely affect changes in domestic credit to the private sector. Despite growth in the management of public and private debt, some challenges still exist, especially in the area of changes in public debt stock closely linked to continuous expansionary fiscal deficit, and fiscal dominance. For private debt, increased domestic borrowings by government from the banks remained a threat to private sector credit because of the "crowding-out" effect. In view of this, the study recommends the pursuit of fiscal adjustment policies that are sufficient to put public debt on a declining path, and strengthen autonomous central bank free from political interference in the effective implementation of monetary policy and private sector crowdin policy. [ABSTRACT FROM AUTHOR]

Although the recent global financial crisis has stimulated a vast amount of research on the impact of public debt on economic growth and also increasingly on the role of private credit, the total levels of indebtedness of an economy have largely been ignored. This paper studies the impact of the total level of and increases in debt-to-GDP on economic growth for 26 developed countries in the short, medium and longer term. We analyse whether we can predict the future level of growth, simply by looking at the total level of debt, or increases in that debt level. We find that there is a negative correlation between high levels of debt and short term economic growth, but that this effect tapers in the medium and long term. Similarly, we find that rapid debt accumulation is negatively related to economic growth over the short term, the impact is less pronounced over the medium term and is non-existent over the long term.

This study empirically analyzes the effect of debt origin on investment efficiency. According to previous studies that report that the quality of financial reporting may vary depending on the origin of the debt, the empirical analysis predicted that the effects of the origin of the debt on investment efficiency would be differential. Debt origin was divided into private and public debt. The analysis results of this study are as follows. First, there is a significant negative relationship between the private debt and investment efficiency, while there is a significant positive relationship between public debt and investment efficiency. This means that capital gains under public debt may be more profitable to managers by improving the quality of their accounting information than those under private debt. This is in line with the previous research which found that, when financing with public debt, the earnings management is reduced and accounting transparency is high. This study focuses on the origin of debt as a determinant of investment efficiency and analyzes the level of investment efficiency according to the origin of debt. We examine the sustainability of firms from the perspective of investment efficiency, such as raising capital and selecting optimal investment options. The results of this study suggest that the level of incentives and investment efficiency of managers may be differentiated depending on the origin of the debt.