Essays in financial economics
Abstract/Contents
- Abstract
- This thesis studies how credit market frictions affect debt pricing and the behavior of borrowers and lenders. In the first chapter, I study the matching of corporate borrowers with banks and the implications of endogenous matching for credit provision. I find that bank-dependent firms borrow from well capitalized banks, while firms with access to the bond market borrow from banks with less capital. This matching improves access to credit during a crisis by pairing bank-dependent firms with stable banks. During the 2008 Financial Crisis, bank-dependent borrowers faced significantly greater loan supply from their relationship banks than they would have without this matching. In the second chapter, I investigate the pricing of bonds issued by states and local governments. I use three distinct, complementary approaches to decompose municipal bond spreads into default and liquidity components, finding that default risk accounts for 74% to 84% of the average municipal bond spread after adjusting for tax-exempt status. The price of default risk is high given the rare incidence of municipal default and implies a high risk premium. In the third chapter, I explore the nature of corporate capital structure adjustments. The third chapter is coauthored with Arthur Korteweg, a professor at the University of Southern California, and Ilya A. Strebulaev, my principal adviser. We show that the frequency of capital structure adjustment varies significantly across firms. Using new hand-collected data from detailed corporate filings, we find that frequently refinancing firms tend to use lines of credit, which have minimal adjustment costs, to fund operating losses and working capital needs. In contrast, infrequently refinancing firms use long-term debt and equity, which have higher issuance costs, to fund investment and rebalance capital structure. Our findings suggest that adjustment costs are an important determinant of firms' financing choices.
Description
| Type of resource | text |
|---|---|
| Form | electronic; electronic resource; remote |
| Extent | 1 online resource. |
| Publication date | 2016 |
| Issuance | monographic |
| Language | English |
Creators/Contributors
| Associated with | Schwert, Michael |
|---|---|
| Associated with | Stanford University, Graduate School of Business. |
| Primary advisor | Strebulaev, I. A. (Ilʹi͡a Alekseevich) |
| Thesis advisor | Strebulaev, I. A. (Ilʹi͡a Alekseevich) |
| Thesis advisor | Bernstein, Shai |
| Thesis advisor | Duffie, Darrell |
| Advisor | Bernstein, Shai |
| Advisor | Duffie, Darrell |
Subjects
| Genre | Theses |
|---|
Bibliographic information
| Statement of responsibility | Michael Schwert. |
|---|---|
| Note | Submitted to the Graduate School of Business. |
| Thesis | Thesis (Ph.D.)--Stanford University, 2016. |
| Location | electronic resource |
Access conditions
- Copyright
- © 2016 by Michael William Schwert
- License
- This work is licensed under a Creative Commons Attribution Non Commercial 3.0 Unported license (CC BY-NC).
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