Universität Bonn

Department of Economics

Olivier Darmouni - University of Columbia

“Bond Market Stimulus: Firm-Level Evidence from 2020-21” together with Kerry Siani


Using micro-data on corporate balance sheets, we study firm behavior in the wake of the unprecedented policy support to the corporate bond market in 2020. As bond yields fell, firms issued bonds to accumulate large amounts of liquid assets that persisted through early 2021. However, these firms generally had access to bank liquidity that they chose not to use: many issuers left their bank credit lines untouched, while others used bond proceeds to repay existing bank loans. Moreover, equity payouts remained high, with over 40% of issuers still repurchasing shares after March 2020. This evidence highlights the value of studying firms' balance sheets, beyond the market rebound, to better understand potential real effects of bond purchases and inform the design of macroeconomic models.

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