Off-balance sheet funding, voluntary support and investment efficiency

• 成果类型: Article
• 署名作者: Segura, Anatoli; Zeng, Jing
• 署名单位: European Central Bank; Bank of Italy; University of Vienna; Frankfurt School Finance & Management
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2020.02.001
• 发表日期: 2020
• 页码: 90-107
• 关键词: Off-balance sheet funding; Voluntary support; signaling; limited liability; Optimal funding mode

摘要

Off-balance sheet financing of an investment is covered by limited liability, whereas on-balance sheet financing creates unlimited liability towards the bank's asset-in-place. Off-balance sheet funding thus gives the bank flexibility to voluntarily support debt repayments when the investment fails, which allows the bank to signal information about the quality of its future projects, improving investment efficiency. Yet, limited liability reduces the bank's effort incentives. Off-balance sheet funding with voluntary support is optimal for activities that are rapidly growing or negatively correlated with existing assets. The model yields testable predictions on the relationship between off-balance sheet debt spreads and sponsors' characteristics. (C) 2020 Elsevier B.V. All rights reserved.