Identifying Empty Creditors with a Shock and Micro-Data

Degryse, Hans; O’Flynn, Kuchulain; Gündüz, Yalın; Ongena, Steven

doi:10.2139/ssrn.3988531

SSRN Journal

2021

DOI: 10.2139/ssrn.3988531

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Identifying Empty Creditors with a Shock and Micro-Data

Hans Degryse

Kuchulain O’Flynn

Yalın Gündüz

et al.

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2023

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Cited by 1 publication

References 34 publications

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Credit Default Swaps and Firm Cyclicality

Norden,

Yin,

Zhao

2023

J. Financ. Quant. Anal.

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We find firm cyclicality decreases by 40% after the inception of credit default swap (CDS) trading. The effect stems from CDS firms’ less aggressive asset growth in good times and is stronger for firms facing a more severe empty creditor problem. Important identification issues are addressed. The result cannot be explained with debt overhang, bank lending cyclicality, or the cyclicality of firms’ business fundamentals. It holds for the cyclicality of various corporate outcomes (inventories, cash, and employment). Importantly, CDS trading impedes unhealthy growth and enhances profitability and firm value. Our finding indicates an important positive real effect of financial innovation.

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Credit Default Swaps and Firm Cyclicality

Norden,

Yin,

Zhao

2023

J. Financ. Quant. Anal.

View full text Add to dashboard Cite

show abstract

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Identifying Empty Creditors with a Shock and Micro-Data

Cited by 1 publication

References 34 publications

Credit Default Swaps and Firm Cyclicality

Credit Default Swaps and Firm Cyclicality

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