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Faculty & Research

Seminars

Brown Bag Seminar(2021-10)

Finance Webinar(2021-35)


Topic: The Crowding Out Effect of Fiscal Expansion on Corporate Borrowing(with Zefeng Chen, Masazumi Hattori, Haonan Zhou)

Speaker: Mai Li, Peking University

Time: Friday, Oct. 15, 12:00–1:00 PM, Beijing Time

Location: Room 217, Guanghua Building 2


Abstract:

We find empirical evidence that expansionary fiscal policy can generate a large spillover effect on corporate borrowing. Using a proprietary firm-bank-loan level data from Japan, we provide causal inference that the significant expansion in the Japanese government bonds (JGBs) issuance starting from year 1998 crowded out the long-term corporate bonds that could have been issued by industrial companies. As a consequence, the affected companies switched to banks for long-term funds in order to maintain a stable debt maturity structure, a mechanism we name as “maturity's gap filling”. This paper tests the mechanism and draws the following conclusions: Upon the fiscal shock, 1) firms that have relied external borrowing heavily on bond market began to borrow more long-term loans and extend their bank loan maturity stronger than the comparable counterparts did; 2) no significant effect on short-term loans is found; 3) such fiscal crowding-out effect on bank loans is not driven by bank's credit supply but rather firm's credit demand; 4) firms with weaker balance sheets (those with less cash holding, lower profitability, and more inventories) exhibited more aggressive gap-filling behaviors; 5) bank loans with maturity tenors similar to the corporate bonds' tenors are more pronounced. We build a simple preferred-habitat model consistent with these findings. We argue that the fiscal expansion may have an unintended consequence on bank's maturity structure.


Introduction:

李劢,于北京大学光华管理学院取得金融学学士学位,美国哥伦比亚大学取得经济学博士学位。博士期间担任宏观经济学、金融经济学课程助教。主要研究领域为金融学和宏观经济学,试图通过实证研究方法探索宏观经济政策、金融市场与金融机构等相关议题。论文研究了汇率政策对于银行信贷及实体经济的影响,央行量化宽松政策对于公司债券市场的传导效应及其影响。本科期间荣获北京大学校级奖学金、博士期间荣获哥伦比亚大学校长奖学金等奖项。


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