The choice between public and private debt: A survey

The choice between public and private debt: A survey

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We survey the major theoretical and empirical findings of the research on the firm’s choice between public and private debt, and on the subsequent decision between bank and non-bank private debt. First, we review information-based theories, where banks are information producers, keep the firm’s priv...

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Main Authors: Jayant R. Kale, Costanza Meneghetti
Format: Article
Language:English
Published: Elsevier 2011-03-01
Series:IIMB Management Review
Online Access:http://www.sciencedirect.com/science/article/pii/S0970389610001072
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spelling doaj-dcec07dfe5484b30838129205d2da0622020-11-24T23:15:29ZengElsevierIIMB Management Review0970-38962011-03-0123151410.1016/j.iimb.2010.12.001The choice between public and private debt: A surveyJayant R. Kale0Costanza Meneghetti1Department of Finance, J. Mack Robinson College of Business, Georgia State University, 35 Broad Street, Atlanta, GA 30303, United StatesDepartment of Finance, West Virginia University, 1601 University Av., Morgantown, WV 26506, United StatesWe survey the major theoretical and empirical findings of the research on the firm’s choice between public and private debt, and on the subsequent decision between bank and non-bank private debt. First, we review information-based theories, where banks are information producers, keep the firm’s private information confidential, or monitor the firm’s actions after the loan. We then review models where banks’ advantage over public lenders is in their superior ability to liquidate the firm or renegotiate loan contract terms in the event of financial distress. Finally, we review the evidence on firms’ use of different types of private debt.http://www.sciencedirect.com/science/article/pii/S0970389610001072
collection DOAJ
language English
format Article
sources DOAJ
author Jayant R. Kale
Costanza Meneghetti
spellingShingle Jayant R. Kale
Costanza Meneghetti
The choice between public and private debt: A survey
IIMB Management Review
author_facet Jayant R. Kale
Costanza Meneghetti
author_sort Jayant R. Kale
title The choice between public and private debt: A survey
title_short The choice between public and private debt: A survey
title_full The choice between public and private debt: A survey
title_fullStr The choice between public and private debt: A survey
title_full_unstemmed The choice between public and private debt: A survey
title_sort choice between public and private debt: a survey
publisher Elsevier
series IIMB Management Review
issn 0970-3896
publishDate 2011-03-01
description We survey the major theoretical and empirical findings of the research on the firm’s choice between public and private debt, and on the subsequent decision between bank and non-bank private debt. First, we review information-based theories, where banks are information producers, keep the firm’s private information confidential, or monitor the firm’s actions after the loan. We then review models where banks’ advantage over public lenders is in their superior ability to liquidate the firm or renegotiate loan contract terms in the event of financial distress. Finally, we review the evidence on firms’ use of different types of private debt.
url http://www.sciencedirect.com/science/article/pii/S0970389610001072
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