Towards a History of the Junk Bond Market, 1910-1955 / Peter F. Basile, Sung Won Kang, John Landon-Lane, Hugh Rockoff.

Format:

Book

Author/Creator:

Basile, Peter F.

Contributor:

National Bureau of Economic Research.

Kang, Sung Won.

Landon-Lane, John.

Rockoff, Hugh.

Series:

Working Paper Series (National Bureau of Economic Research) no. w21559.

NBER working paper series no. w21559

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2015.

Summary:

We present a new monthly index of the yield on junk (high yield) bonds from 1910-1955. We then use the index to reexamine some of the main debates about the financial history of the interwar years. A close look at junk bond yields: (1) strengthens the view that the decline in lending standards in the late 1920s was modest at best: (2) casts doubt on the view that the banking crisis that began in 1930 disrupted financial markets because banks liquidated their holdings of risky bonds; (3) strengthens the view that the cost of capital rose substantially in the early 1930s and remained high for the rest of the decade; (4) casts doubt on the view that financial markets entered a liquidity trap in the second half of the 1930s; and (5) strengthens the case for believing that junk bond yields contain some information useful for making economic forecasts.

Notes:

Print version record

September 2015.