Journal Article

Is debt overhang causing firms to underinvest?

Abstract: Many economists have suggested that the weakness of corporate balance sheets is constraining business spending and investment, and that this in turn is impeding growth and the recovery. High levels of debt can depress spending and investment through several channels. This Commentary explains one of them?debt overhang can cause firms to underinvest?and points to ways in which this effect might be inhibiting the recovery.

Keywords: Corporations - Finance; Debt;

Bibliographic Information

Provider: Federal Reserve Bank of Cleveland

Part of Series: Economic Commentary

Publication Date: 2010

Issue: Jul

Order Number: 7