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Contractual savings, capital markets, and firms'financing choices

Author

Listed:
  • Musalem, Alberto R.
  • Impavido, Gregorio
  • Tressel, Thierry

Abstract

The authors analyze the relationship between the development and asset allocation of contractual savings and firms'capital structures. The authors develop a simple model of firms'leverage and debt maturity decisions. They illustrate the mechanisms through which contractual savings development may affect corporate financing patterns. In the empirical section, the authors show that the development and asset allocation of contractual savings have an independent impact on firms'financing choices. Different channels are identified. In market-based economies, an increase in the proportion of shares in the portfolio of contractual savings leads to a decline in firms'leverage. In bank-based economies, instead, an increase in the size of contractual savings is associated with an increase in leverage and debt maturity in the corporate sector

Suggested Citation

  • Musalem, Alberto R. & Impavido, Gregorio & Tressel, Thierry, 2001. "Contractual savings, capital markets, and firms'financing choices," Policy Research Working Paper Series 2612, The World Bank.
    • Handle: RePEc:wbk:wbrwps:2612
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    Cited by:

    1. Impavido, Gregorio & Musalem, Alberto R., 2000. "Contractual savings, stock, and asset markets," Policy Research Working Paper Series 2490, The World Bank.
    2. Mr. Gianni De Nicolo & Ms. Mary G Zephirin & Philip F. Bartholomew & Ms. Jahanara Zaman, 2003. "Bank Consolidation, Internationalization, and Conglomeration: Trends and Implications for Financial Risk," IMF Working Papers 2003/158, International Monetary Fund.
    3. Gregorio Impavido & Mr. Heinz Rudolph & Mr. Luigi Ruggerone, 2013. "Bank Funding in Central, Eastern and South Eastern Europe Post Lehman: A “New Normal”?," IMF Working Papers 2013/148, International Monetary Fund.
    4. Yuwei Hu, 2012. "Growth of Asian Pension Assets: Implications for Financial and Capital Markets," Working Papers id:5025, eSocialSciences.
    5. Tullio Jappelli & Luigi Pistaferri, 2002. "Tax Incentives for Household Saving and Borrowing," CSEF Working Papers 83, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    6. Hu, Yuwei, 2012. "Growth of Asian Pension Assets: Implications for Financial and Capital Markets," ADBI Working Papers 360, Asian Development Bank Institute.
    7. Impavido, Gregorio & Musalem, Alberto R. & Tressel, Thierry, 2001. "Contractual savings institutions and banks'stability and efficiency," Policy Research Working Paper Series 2751, The World Bank.
    8. Ashok Thomas & Luca Spataro, 2013. "Pension funds and Market Efficiency: A review," Discussion Papers 2013/164, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    9. Juan Gabriel Brida & María Nela Seijas, 2016. "The impact of funded pension schemes in domestic capital markets: evaluating global reforms," Economics Bulletin, AccessEcon, vol. 36(1), pages 493-514.
    10. Thomas, Ashok & Spataro, Luca & Mathew, Nanditha, 2014. "Pension funds and stock market volatility: An empirical analysis of OECD countries," Journal of Financial Stability, Elsevier, vol. 11(C), pages 92-103.
    11. Vittas, Dimitri, 2004. "Insurance regulation in Jordan : New rules--old system," Policy Research Working Paper Series 3298, The World Bank.

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