Fiscal Consolidation and the Cost of Credit true
By:Senay Agca,Deniz Igan
Published on 2013-02-01 by International Monetary Fund
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.
This Book was ranked at 36 by Google Books for keyword Consolidation.
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Book which was published by International Monetary Fund since 2013-02-01 have ISBNs, ISBN 13 Code is 9781475573695 and ISBN 10 Code is 1475573693
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