Credit default swaps and firm cyclicality

Detalhes bibliográficos
Autor(a) principal: Norden,, Lars
Data de Publicação: 2022
Outros Autores: Yin, Chao, Zhao, Lei
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Repositório Institucional do FGV (FGV Repositório Digital)
Texto Completo: https://hdl.handle.net/10438/35500
Resumo: We find firm cyclicality decreases by 40% after the inception of credit default swap (CDS) trading. The effect stems from CDS firms’ less aggressive asset growth in good times and is stronger for firms facing a more severe empty creditor problem. Important identification issues are addressed. The result cannot be explained with debt overhang, bank lending cyclicality or the cyclicality of firms’ business fundamentals. It holds for the cyclicality of various corporate outcomes (inventories, cash and employment). Importantly, CDS trading impedes unhealthy growth and enhances profitability and firm value. Our finding indicates an important positive real effect of financial innovation.
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spelling Norden,, LarsYin, ChaoZhao, LeiDemais unidades::RPCAEscolas::EBAPE2024-07-01T17:54:27Z2024-07-01T17:54:27Z2022https://hdl.handle.net/10438/35500We find firm cyclicality decreases by 40% after the inception of credit default swap (CDS) trading. The effect stems from CDS firms’ less aggressive asset growth in good times and is stronger for firms facing a more severe empty creditor problem. Important identification issues are addressed. The result cannot be explained with debt overhang, bank lending cyclicality or the cyclicality of firms’ business fundamentals. It holds for the cyclicality of various corporate outcomes (inventories, cash and employment). Importantly, CDS trading impedes unhealthy growth and enhances profitability and firm value. Our finding indicates an important positive real effect of financial innovation.engMercados financeirosCredores exigentesCrescimento de ativosCrescimento do empregoEconomiaMercado financeiroDevedores e credoresTitulos (Finanças)Swaps (Finanças)Credit default swaps and firm cyclicalityinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleinfo:eu-repo/semantics/openAccessreponame:Repositório Institucional do FGV (FGV Repositório Digital)instname:Fundação Getulio Vargas (FGV)instacron:FGVORIGINALCredit default swaps and firm cyclicality.pdfCredit default swaps and firm cyclicality.pdfPDFapplication/pdf448679https://repositorio.fgv.br/bitstreams/3630eafd-c4b7-404a-8711-a301b42ba993/download413f270b0ec5196f42a9e7690a2297a6MD51LICENSElicense.txtlicense.txttext/plain; charset=utf-85112https://repositorio.fgv.br/bitstreams/aa2027f5-427e-4580-8343-acc5f8e4f36d/download2a4b67231f701c416a809246e7a10077MD52TEXTCredit default swaps and firm cyclicality.pdf.txtCredit default swaps and 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dc.title.eng.fl_str_mv Credit default swaps and firm cyclicality
title Credit default swaps and firm cyclicality
spellingShingle Credit default swaps and firm cyclicality
Norden,, Lars
Mercados financeiros
Credores exigentes
Crescimento de ativos
Crescimento do emprego
Economia
Mercado financeiro
Devedores e credores
Titulos (Finanças)
Swaps (Finanças)
title_short Credit default swaps and firm cyclicality
title_full Credit default swaps and firm cyclicality
title_fullStr Credit default swaps and firm cyclicality
title_full_unstemmed Credit default swaps and firm cyclicality
title_sort Credit default swaps and firm cyclicality
author Norden,, Lars
author_facet Norden,, Lars
Yin, Chao
Zhao, Lei
author_role author
author2 Yin, Chao
Zhao, Lei
author2_role author
author
dc.contributor.unidadefgv.por.fl_str_mv Demais unidades::RPCA
Escolas::EBAPE
dc.contributor.author.fl_str_mv Norden,, Lars
Yin, Chao
Zhao, Lei
dc.subject.por.fl_str_mv Mercados financeiros
Credores exigentes
Crescimento de ativos
Crescimento do emprego
topic Mercados financeiros
Credores exigentes
Crescimento de ativos
Crescimento do emprego
Economia
Mercado financeiro
Devedores e credores
Titulos (Finanças)
Swaps (Finanças)
dc.subject.area.por.fl_str_mv Economia
dc.subject.bibliodata.por.fl_str_mv Mercado financeiro
Devedores e credores
Titulos (Finanças)
Swaps (Finanças)
description We find firm cyclicality decreases by 40% after the inception of credit default swap (CDS) trading. The effect stems from CDS firms’ less aggressive asset growth in good times and is stronger for firms facing a more severe empty creditor problem. Important identification issues are addressed. The result cannot be explained with debt overhang, bank lending cyclicality or the cyclicality of firms’ business fundamentals. It holds for the cyclicality of various corporate outcomes (inventories, cash and employment). Importantly, CDS trading impedes unhealthy growth and enhances profitability and firm value. Our finding indicates an important positive real effect of financial innovation.
publishDate 2022
dc.date.issued.fl_str_mv 2022
dc.date.accessioned.fl_str_mv 2024-07-01T17:54:27Z
dc.date.available.fl_str_mv 2024-07-01T17:54:27Z
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
format article
status_str publishedVersion
dc.identifier.uri.fl_str_mv https://hdl.handle.net/10438/35500
url https://hdl.handle.net/10438/35500
dc.language.iso.fl_str_mv eng
language eng
dc.rights.driver.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
dc.source.none.fl_str_mv reponame:Repositório Institucional do FGV (FGV Repositório Digital)
instname:Fundação Getulio Vargas (FGV)
instacron:FGV
instname_str Fundação Getulio Vargas (FGV)
instacron_str FGV
institution FGV
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collection Repositório Institucional do FGV (FGV Repositório Digital)
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