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Fiscal Consolidation and the Cost of Credit : Evidence from Syndicated Loans / Senay Agca, Deniz Igan.
- Format:
- Book
- Government document
- Author/Creator:
- Ağca, Şenay.
- Series:
- IMF Working Papers; Working Paper ; No. 2013/036
- IMF Working Papers
- Language:
- English
- Subjects (All):
- Debts, External.
- Debts, External--Statistics.
- Syndicated loans.
- Physical Description:
- 1 online resource (45 p.)
- Place of Publication:
- Washington, D.C. : International Monetary Fund, 2013.
- Language Note:
- English
- Summary:
- We examine how the cost of corporate credit varies around fiscal consolidations aimed at reducing government debt. Using a new dataset on fiscal consolidations and syndicated corporate loan data, we find that loan spreads increase with fiscal consolidations, especially for small firms, domestic firms, and for firms with limited alternative financing sources. These adverse effects are mitigated substantially if consolidations are large, and can be avoided if consolidations are also accompanied with more adaptable macroeconomic policies and implemented by a stable government. These findings suggest that lenders price the short-term recessionary effects in loans but large consolidations can reduce or undo the increase in spreads, especially under favorable country conditions, by signaling credibility and creating expansionary expectations.
- Contents:
- Cover; Contents; I. Introduction; II. Background on the Potential Channels of Transmission; III. Data and Methodology; A. Data; Fiscal Consolidation Measure; Loan and Firm Characteristics; Country Characteristics; B. Methodology; IV. Empirical Findings; A. Descriptive Statistics; B. Baseline Regressions; C. Firm and Loan Characteristics; D. Country Conditions; E. Composition of Fiscal Consolidation Packages; F. Alternative Specifications and Robustness; V. Conclusions; References
- Notes:
- Description based upon print version of record.
- Includes bibliographical references.
- Description based on print version record.
- ISBN:
- 9781475550221
- 1475550227
- 9781475542233
- 1475542232
- 9781299265165
- 1299265162
- 9781475573695
- 1475573693
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