EURO-Online login
- New to EURO? Create an account
- I forgot my username and/or my password.
- Help with cookies
(important for IE8 users)
728. Does Sovereign Debt Consolidation Shape Firms’ Credit Cost?
Invited abstract in session WC-63: Applications to Economics and Finance, stream OR in Banking, Finance and Insurance: New Tools for Risk Management.
Wednesday, 12:30-14:00Room: S14 (building: 101)
Authors (first author is the speaker)
| 1. | Claire Economidou
|
| Economics, University of Piraeus |
Abstract
This paper studies the effect of sovereign debt on corporate borrowing cost. We develop a theoretical model of a global financial intermediary sector which is tested using data on global syndicated loans for a large panel of firms, banks and countries. Our evidence shows that for government debt around 75 per cent of GDP, any additional percentage increase burdens firms borrowing cost by 11.73 basis points. The effect becomes more pronounced for firms and banks located in the same country, while the degree varies depending on the firm’s size and profitability. Overall, results underline that the cost of loans is a relevant mechanism through which government debt affects real economic activity.
Keywords
- Economic Modeling
- Finance and Banking
- Financial Modelling
Status: accepted
Back to the list of papers