Working Paper
Corporate Debt Maturity Matters for Monetary Policy
Jungherr, Joachim; Meier, Matthias; Reinelt, Timo; Schott, Immo (2024-08-16)
We provide novel empirical evidence that firms’ investment is more responsive to monetary policy when a higher fraction of their debt matures. In a heterogeneous firm New Keynesian model with financial frictions and endogenous debt maturity, two channels explain this finding: (1.) Firms with more maturing debt have larger roll-over needs and are therefore more exposed to fluctuations in the real interest rate (roll-over risk). (2.) These firms also have higher default risk and therefore react more strongly to changes in the real burden of outstanding nominal debt (debt overhang). ...
Working Paper Series , Paper 2024-30

Working Paper
Corporate Debt Maturity Matters for Monetary Policy
Jungherr, Joachim; Meier, Matthias; Reinelt, Timo; Schott, Immo (2024-12-06)
We provide novel empirical evidence that firms’ investment is more responsive to monetary policy when a higher fraction of their debt matures. In a heterogeneous firm New Keynesian model with financial frictions and endogenous debt maturity, two channels explain this finding: (1.) Firms with more maturing debt have larger roll-over needs and are therefore more exposed to fluctuations in the real interest rate (roll-over risk). (2.) These firms also have higher default risk and therefore react more strongly to changes in the real burden of outstanding nominal debt (debt overhang). ...
International Finance Discussion Papers , Paper 1402