A Gap-Filling Theory of Corporate Debt Maturity Choice

@article{Greenwood2008AGT,
  title={A Gap-Filling Theory of Corporate Debt Maturity Choice},
  author={R. Greenwood and S. Hanson and J. Stein},
  journal={NBER Working Paper Series},
  year={2008}
}
We argue that time-series variation in the maturity of aggregate corporate debt issues arises because firms behave as macro liquidity providers, absorbing the large supply shocks associated with changes in the maturity structure of government debt. We document that when the government funds itself with relatively more short-term debt, firms fill the resulting gap by issuing more long-term debt, and vice-versa. This type of liquidity provision is undertaken more aggressively: i) in periods when… Expand
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