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The determinants of long-term debt issuance by European banks: evidence of two crises. (2015). Yang, Jing ; Rixtel, Adrian ; Romo Gonzalez, Luna Azahara ; van Rixtel, Adrian.
In: BIS Working Papers.
RePEc:bis:biswps:513.

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  1. Bond issuance and the funding choices of European banks: The consequences of public debt. (2023). Keasey, Kevin ; Cariboni, Jessica ; Rancan, Michela ; Vallascas, Francesco.
    In: Journal of Empirical Finance.
    RePEc:eee:empfin:v:74:y:2023:i:c:s0927539823000750.

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  2. Dual holding and bank risk. (2023). Taatian, Ali ; Bonini, Stefano.
    In: The Financial Review.
    RePEc:bla:finrev:v:58:y:2023:i:4:p:735-763.

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  3. Digital currencies in financial networks. (2022). Rancan, Michela ; Kavonius, Ilja Kristian ; Castren, Olli.
    In: Journal of Financial Stability.
    RePEc:eee:finsta:v:60:y:2022:i:c:s1572308922000286.

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  4. Developments in debt issuance costs of South African banks. (2020). Steenkamp, Daan ; Nkuna, Mukelani ; Naidoo, Eyollan.
    In: Working Papers.
    RePEc:rbz:wpaper:10157.

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  5. Empirical Investigation of the Effect of Bank Long Term Debt on Loans and Output in the Euro-zone. (2017). Chevallier, Claire.
    In: CREA Discussion Paper Series.
    RePEc:luc:wpaper:17-04.

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  6. Changing business models in international bank funding. (2017). Rixtel, Adrian ; Gambacorta, Leonardo ; van Rixtel, Adrian ; Schiaffi, Stefano .
    In: CEPR Discussion Papers.
    RePEc:cpr:ceprdp:11957.

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  7. Changing business models in international bank funding. (2017). Rixtel, Adrian ; Gambacorta, Leonardo ; Schiaffi, Stefano ; van Rixtel, Adrian.
    In: BIS Working Papers.
    RePEc:bis:biswps:614.

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  8. Changing business models in international bank funding. (2017). Rixtel, Adrian ; Gambacorta, Leonardo ; van Rixtel, Adrian ; Schiaffi, Stefano.
    In: Working Papers.
    RePEc:bde:wpaper:1736.

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  9. PREDICTION OF BANKING SECTOR CONDITION. (2017). Jaworska, Patrycja Chodnicka.
    In: Review of Socio - Economic Perspectives.
    RePEc:aly:journl:201703.

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  10. Asset Encumbrance, Bank Funding, and Financial Fragility. (2016). Chapman, James ; Anand, Kartik ; Ahnert, Toni ; Gai, Prasanna.
    In: Annual Conference 2016 (Augsburg): Demographic Change.
    RePEc:zbw:vfsc16:145782.

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  11. Asset encumbrance, bank funding and financial fragility. (2016). Chapman, James ; Anand, Kartik ; Ahnert, Toni ; Gai, Prasanna.
    In: Discussion Papers.
    RePEc:zbw:bubdps:172016.

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  12. The determinants of long-term debt issuance by European banks: evidence of two crises.. (2016). Yang, Jing ; Rixtel, Adrian ; Romo Gonzalez, Luna Azahara ; van Rixtel, Adrian.
    In: Working Papers.
    RePEc:bde:wpaper:1621.

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  13. The drivers of European banks’ US dollar debt issuance: opportunistic funding in times of crisis?. (2016). Romo Gonzalez, Luna Azahara.
    In: Working Papers.
    RePEc:bde:wpaper:1611.

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  14. Asset Encumbrance, Bank Funding and Financial Fragility. (2016). Chapman, James ; Ahnert, Toni ; Gai, Prasanna ; Anand, Kartik.
    In: Staff Working Papers.
    RePEc:bca:bocawp:16-16.

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References

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  54. Diamond’s model also predicts that liquidity risk increases with leverage, and so firms with higher leverage would be expected to use more long-term debt, all else being equal. Apart from liquidity risk, firms may also prefer to issue more liquid (i.e. short-term) debt, because it has the lowest current interest cost (Baker et al., 2003). Long-term debt financing may be preferable also because of the tax benefits of debt. This debt bias is caused by interest payments being deductible from corporate income tax, while dividend payments are not. Managers may accelerate tax deductions by issuing more long-term debt, especially when long-term rates are relatively high or when interest rates are particularly volatile. Empirical research offers little support for this hypothesis.
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  61. Finally, firms have the option to issue secured or unsecured long-term debt, i.e. debt that is backed explicitly by collateral or not. Erel et al. (2012) find that firms issuing secured debt tend to be smaller and much more highly levered than are unsecured issuers. These firms also tend to hold more cash, which indicates that firms issuing secured debt are concerned about liquidity constraints in the future.
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  62. Firms may also decide to issue long-term debt due to time-varying liquidity risk. Diamond (1991a) and Rajan (1992) note that short-term debt may be difficult to refinance, which may lead to costly financial distress. Although issuing short-term debt reduces a firm’s borrowing costs in the presence of information asymmetries, it exposes the firm to liquidity risk, as the debt will have to be refinanced This suggests that when liquidity risk is higher, the preference for long-term debt will be higher. Diamond (1991a) argues that firms with high or very low credit ratings use shorter-term debt, while medium-quality firms use longer-term debt20 ; this hypothesis is supported by Guedes and Opler (1996) and Stohs and Mauer (1996).
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  99. Neg Stock market performance Market timing Firms issue equity when stock markets perform well Neg Volatility Market timing; reduced market access ( Caballero and Krishnamurthy, 2008; Erel et al., 2012).
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  100. Negative Bank performance (as measured by rating migrations and (abnormal) equity returns) Information revelation (Covitz and Harrison, 2004). Banks issue bonds to convey positive information to markets Positive Size (total assets and growth total assets) Leverage targeting (Adrian and Shin, 2010a; Acharya et al., 2011; Damar et al., 2013; Berger et al., 2008; Gropp and Heider, 2010); agency costs and asymmetric information. Leverage targeting banks grow by expanding debt (and hence issue long-term debt, in addition to short-term debt). Larger banks are less prone to agency conflicts and asymmetric information and hence issue long-term debt.
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  101. Negative Bank performance (profitability and dividends) Agency costs and asymmetric information (Gropp and Heider, 2010).
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  102. Panel B: Macroeconomic and financial market conditions Term spread Market timing; maturity matching (Emery, 2001). Firms shorten maturity of new debt in response to increases in term spread Neg Interest rate Market timing Firms shorten maturity of new debt in response to increases in interest rates Neg Credit spread Market timing Different effect on issuance LT debt for IG and BIG firms + IG, - BIG Inflation Market timing Firms shorten maturity of new debt in response to higher inflation Neg GDP/business cycle variables Market timing (Choe et al., 1993; Dittmar and Dittmar, 2008); macroeconomic impact (Erel et al., 2012). Economic expansion reduces the cost of equity relative to the cost of debt, inducing firms not to issue debt, but equity (“financing waves”).
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  103. Positive Bank risk proxies, including credit ratings Leverage targeting (see above); market discipline (Covitz et al., 2004). More risky banks have lower leverage and lower recourse to debt issuance, especially during periods of economic and financial stress.
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  113. To have sufficient data available for econometric analysis, we include banks that were taken over only if we have at least four years of data. Moreover, given the enormous task of cleaning up the database, we decided to include only banks that issued more than 200 bonds during 1999-2013. Including “dead” banks, this gave us a preliminary sample group of 77 banks. Of these 77 banks, we dropped 14 due to data constraints with respect to the explanatory variables. In the end, we settled for 23 Other papers have the same experience with the construction of bank samples. For example, Rose and Wieladek (2012) conducted also extensive bank-by-bank investigations (including Google searches) for certain institutional characteristics in order to construct their sample group.
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  114. We obtain these data from Thomson Reuters Datastream, Bloomberg and Markit. The estimations are conducted for the period before the crisis (January 1999 – September 2007) and since the crisis (October 2007 – March 2013). Depending on the specification used, we have between 1,740 and 1,884 observations. Although the banking literature suggests that tax reasons may drive debt issuance of banks as well, the monthly frequency of our country-analysis is less suited to test the tax hypothesis, as corporate tax rates change rather infrequently.
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  115. Wheelock, A. and M. Wohar (2009), “Can the term spread predict output growth and recessions? A survey of the literature”, Federal Reserve Bank of St. Louis, Review, 91, September/October, 419-440. 30 WP513 The determinants of long-term debt issuance by European banks: evidence of two crises Chart 1: Long-term debt securities as percentage of total assets Source: ECB MFI balance sheet statistics. Long-term debt securities: amounts outstanding of debt securities issued with an original maturity of above one year. Short-term debt securities: amounts outstanding of debt securities issued with an original maturity of up to one year. The data for banks in the UK are not fully comparable with those of the euro area countries, as data on debt securities issued with a maturity of between one and two years are only available for the domestic sector as counterpart. Hence, the amount of these securities that is held by investors outside the UK is not included.
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  116. Woodford (eds.), NBER Macroeconomics Annual 2012, Volume 27, 159-214.
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  117. WP513 The determinants of long-term debt issuance by European banks: evidence of two crises 27 Emery, G. (2001), “Cyclical demand and the choice of debt maturity”, Journal of Business, 74, 557–590.
    Paper not yet in RePEc: Add citation now

  118. WP513 The determinants of long-term debt issuance by European banks: evidence of two crises 29 Panetta, F., T. Faeh, G. Grande, C. Ho, M. King, A. Levy, F. Signoretti, M. Taboga and A. Zaghini (2009), “An assessment of financial sector rescue programmes”, BIS Papers No.48.

  119. WP513 The determinants of long-term debt issuance by European banks: evidence of two crises 49 equity and between short and long-term debt (Marsh, 1982; Baker et al., 2003; Baker, 2009). Indeed, these factors appear in studies for US and European firms to be far more significant than a firm’s financial structure, e.g. firm-specific characteristics.
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Cocites

Documents in RePEc which have cited the same bibliography

  1. International Channels of Transmission of Monetary Policy and the Mundellian Trilemma. (2016). Rey, Helene.
    In: NBER Working Papers.
    RePEc:nbr:nberwo:21852.

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  2. Regulatory change and monetary policy. (2016). Bank for International Settlements, .
    In: CGFS Papers.
    RePEc:bis:biscgf:55.

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  3. Monetary policy, excessive risk-taking and banking crisis. (2015). Zaghdoudi, Taha.
    In: MPRA Paper.
    RePEc:pra:mprapa:69547.

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  4. Dilemma not Trilemma: The Global Financial Cycle and Monetary Policy Independence. (2015). Rey, Helene.
    In: NBER Working Papers.
    RePEc:nbr:nberwo:21162.

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  5. Spillover effects of the U.S. financial crisis on financial markets in emerging Asian countries. (2015). Kim, Hyeongwoo ; Lee, Bong-Soo.
    In: International Review of Economics & Finance.
    RePEc:eee:reveco:v:39:y:2015:i:c:p:192-210.

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  6. Vulnerable banks. (2015). thesmar, david ; Landier, Augustin ; Greenwood, Robin.
    In: Journal of Financial Economics.
    RePEc:eee:jfinec:v:115:y:2015:i:3:p:471-485.

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  7. Fire Sales and Information Advantage: When Informed Investor Helps. (2015). Zhang, Lei ; Massa, Massimo.
    In: CEPR Discussion Papers.
    RePEc:cpr:ceprdp:10536.

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  8. Globalization of corporate risk taking. (2014). Shin, Hyun Song ; Bruno, Valentina.
    In: Journal of International Business Studies.
    RePEc:pal:jintbs:v:45:y:2014:i:7:p:800-820.

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  9. Global Liquidity and Drivers of Cross-Border Bank Flows. (2014). Claessens, Stijn ; Cerutti, Eugenio ; Ratnovski, Lev.
    In: IMF Working Papers.
    RePEc:imf:imfwpa:2014/069.

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  10. Global Liquidity and Drivers of Cross-Border Bank Flows. (2014). Ratnovski, Lev ; Claessens, Stijn ; Cerutti, Eugenio.
    In: CEPR Discussion Papers.
    RePEc:cpr:ceprdp:10314.

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  11. A Dynamic Model of Banking with Uninsurable Risks and Regulatory Constraints. (2014). Michaelides, Alexander ; Mankart, Jochen ; Pagratis, Spyros .
    In: CEPR Discussion Papers.
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  12. A Policy Model to Analyze Macroprudential Regulations and Monetary Policy. (2014). Alpanda, Sami ; Meh, Cesaire ; Cateau, Gino.
    In: Staff Working Papers.
    RePEc:bca:bocawp:14-6.

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  13. Search-for-Yield in Canadian Fixed-Income Mutual Funds and Monetary Policy. (2014). Sierra Jimenez, Jesus ; Gungor, Sermin.
    In: Staff Working Papers.
    RePEc:bca:bocawp:14-3.

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  14. Banks, Markets, and Financial Stability. (2013). Pausch, Thilo ; Fecht, Falko ; Eder, Armin .
    In: Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order.
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  15. Unemployment benefits and financial leverage in an agent based macroeconomic model. (2013). Russo, Alberto ; Gallegati, Mauro ; Ricetti, Luca .
    In: Economics - The Open-Access, Open-Assessment E-Journal.
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  16. Regole di Basilea e modelli di vigilanza: quale convergenza? (Basel rules and supervisory models: What convergence?). (2013). Montanaro, Elisabetta .
    In: Moneta e Credito.
    RePEc:psl:moneta:2013:43.

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  17. The rise and fall of universal banking: ups and downs of a sample of large and complex financial institutions since the late �90s. (2013). Masciantonio, Sergio ; Tiseno, Andrea .
    In: Questioni di Economia e Finanza (Occasional Papers).
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  18. Tracking Variation in Systemic Risk at US Banks During 1974-2013. (2012). Laeven, Luc ; Kane, Edward ; Hovakimian, Armen.
    In: NBER Working Papers.
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  19. Local Bias and Stock Market Conditions. (2012). Laeven, Luc ; Giannetti, Mariassunta.
    In: CEPR Discussion Papers.
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  20. The Role of Equity Funds in the Financial Crisis Propagation. (2012). Hau, Harald ; Lai, Sandy .
    In: CEPR Discussion Papers.
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  21. Sizing Up Repo. (2012). Nagel, Stefan ; Krishnamurthy, Arvind ; Orlov, Dmitry.
    In: CEPR Discussion Papers.
    RePEc:cpr:ceprdp:8795.

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  22. Evaporating Liquidity. (2012). Nagel, Stefan.
    In: CEPR Discussion Papers.
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  23. Aggregate Investment Externalities and Macroprudential Regulation. (2012). Rochet, Jean ; Gersbach, Hans.
    In: CEPR Discussion Papers.
    RePEc:cpr:ceprdp:8764.

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  24. Bank leverage shocks and the macroeconomy: a new look in a data-rich environment.. (2012). Stevanovic, Dalibor ; Mésonnier, Jean-Stéphane ; Mesonnier, J-S., .
    In: Working papers.
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  25. Debt deleveraging and business cycles: An agent-based perspective. (2011). Teglio, Andrea ; Raberto, Marco ; Cincotti, Silvano.
    In: Economics Discussion Papers.
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  26. Get rid of banks and build up a modern financial world. (2011). Lenz, Rainer .
    In: MPRA Paper.
    RePEc:pra:mprapa:33501.

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  27. Duffie, Darrell: How Big Banks Fail and What to Do about It. (2011). Baglioni, Angelo.
    In: Journal of Economics.
    RePEc:kap:jeczfn:v:103:y:2011:i:1:p:101-103.

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  28. Velocity of Pledged Collateral; Analysis and Implications. (2011). Singh, Manmohan.
    In: IMF Working Papers.
    RePEc:imf:imfwpa:2011/256.

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  29. Tranching, CDS and Asset Prices: How Financial Innovation Can Cause Bubbles and Crashes. (2011). Fostel, Ana ; Geanakoplos, John.
    In: Cowles Foundation Discussion Papers.
    RePEc:cwl:cwldpp:1809.

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  30. Tranching, CDS and Asset Prices: How Financial Innovation Can Cause Bubbles and Crashes. (2011). Fostel, Ana ; Geanakoplos, John.
    In: Levine's Working Paper Archive.
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  31. Asset Prices and the Financial Crisis of 2007–09: An Overview of Theories and Policies. (2010). Malliaris, Anastasios ; Hayford, Marc .
    In: Forum for Social Economics.
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  32. Measuring Monetary Conditions in US Asset Markets - A Market Specific Approach. (2010). Herz, Bernhard ; Drescher, Christian.
    In: MPRA Paper.
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  33. Liquidity Risk of Corporate Bond Returns: A Conditional Approach. (2010). Amihud, Yakov ; Acharya, Viral ; Bharath, Sreedhar T..
    In: NBER Working Papers.
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  34. Managing Credit Booms and Busts: A Pigouvian Taxation Approach. (2010). Korinek, Anton ; Jeanne, Olivier.
    In: NBER Working Papers.
    RePEc:nbr:nberwo:16377.

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  35. Econometric Measures of Systemic Risk in the Finance and Insurance Sectors. (2010). Pelizzon, Loriana ; Lo, Andrew ; Billio, Monica ; Getmansky, Mila.
    In: NBER Working Papers.
    RePEc:nbr:nberwo:16223.

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  36. Yesterdays Heroes: Compensation and Creative Risk-Taking. (2010). Scheinkman, Jose ; Hong, Harrison ; Cheng, Ing-Haw ; Ing-Haw Cheng, Harrison Hong, Jose A. Scheinkman, .
    In: NBER Working Papers.
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  37. Rollover Risk and Credit Risk. (2010). Xiong, Wei ; He, Zhiguo.
    In: NBER Working Papers.
    RePEc:nbr:nberwo:15653.

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  38. Global Funding Liquidity, Equity Returns and Crash Risk: Implications for Monetary Policy. (2010). Corcoran, Aidan.
    In: The Institute for International Integration Studies Discussion Paper Series.
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  39. Managing Credit Booms and Busts: A Pigouvian Taxation Approach. (2010). Korinek, Anton ; Jeanne, Olivier.
    In: Working Paper Series.
    RePEc:iie:wpaper:wp10-12.

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  40. Funding liquidity risk and the cross-section of stock returns. (2010). Etula, Erkko ; Adrian, Tobias.
    In: Staff Reports.
    RePEc:fip:fednsr:464.

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  41. Financial amplification of foreign exchange risk premia. (2010). Groen, Jan ; Etula, Erkko ; Adrian, Tobias ; Jan J. J. Groen, .
    In: Staff Reports.
    RePEc:fip:fednsr:461.

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  42. Financial statistics for the United States and the crisis: what did they get right, what did they miss, and how should they change?. (2010). Palumbo, Michael ; Kohn, Donald L. ; Eichner, Matthew J..
    In: Finance and Economics Discussion Series.
    RePEc:fip:fedgfe:2010-20.

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  43. The Credit Crisis around the Globe: Why Did Some Banks Perform Better?. (2010). Stulz, René ; Beltratti, Andrea.
    In: Working Paper Series.
    RePEc:ecl:ohidic:2010-5.

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  44. Solving the Present Crisis and Managing the Leverage Cycle. (2010). Geanakoplos, John.
    In: Cowles Foundation Discussion Papers.
    RePEc:cwl:cwldpp:1751.

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  45. The Leverage Cycle. (2010). Geanakoplos, John.
    In: Cowles Foundation Discussion Papers.
    RePEc:cwl:cwldpp:1715r.

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  46. Rescuing Banks from the Effects of the Financial Crisis. (2009). Marchionne, Francesco ; Fratianni, Michele.
    In: Working Papers.
    RePEc:iuk:wpaper:2009-04.

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  47. When Everyone Runs for the Exit. (2009). Pedersen, Lasse.
    In: International Journal of Central Banking.
    RePEc:ijc:ijcjou:y:2009:q:4:a:10.

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  48. The Crisis: Policy Lessons and Policy Challenges. (2009). Pisani-Ferry, Jean ; Benassy-Quere, Agnès ; Jacquet, Pierre ; Coeure, Benoit.
    In: Working Papers.
    RePEc:cii:cepidt:2009-28.

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  49. Deciphering the Liquidity and Credit Crunch 2007-2008. (2009). Brunnermeier, Markus.
    In: Journal of Economic Perspectives.
    RePEc:aea:jecper:v:23:y:2009:i:1:p:77-100.

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  50. Financial Regulation in a System Context. (2008). Shin, Hyun Song ; Morris, Stephen.
    In: Brookings Papers on Economic Activity.
    RePEc:bin:bpeajo:v:39:y:2008:i:2008-02:p:229-274.

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