TY  - JOUR
TI  - Equity, Bonds, and Bank Debt: Capital Structure and Financial Market 
Equilibrium Under Asymmetric Information 
T2  - Journal of Political Economy
IS  - 2
KW  - asymmetric information
KW  - capital structure
KW  - financial market equilibrium
AB  - This paper proposes a model of financial markets and corporate 
finance, with asymmetric information and no taxes, where equity 
issues, bank debt, and bond financing coexist in equilibrium. The 
relationship banking aspect of financial intermediation is 
emphasized: firms turn to banks as a source of investment mainly 
because banks are good at helping them through times of financial 
distress. This financial flexibility is costly since banks face costs 
of capital themselves (which they attempt to minimize through 
securitization). To avoid this intermediation cost, firms may turn to 
bond or equity financing, but bonds imply an inefficient liquidation 
cost and equity an informational dilution cost. We show that in 
equilibrium the riskier firms prefer bank loans, the safer ones tap 
the bond markets, and the ones in between prefer to issue both equity 
and bonds. This segmentation is broadly consistent with stylized 
facts. 
AU  - Bolton, Patrick
AU  - Freixas, Xavier
UR  - http://ecsocman.hse.ru/text/18747929/
PY  - 2000
SP  - 
M2  - 
VL  - 108
SN  - 
N1  - 
LA  - EN
CY  - 
PB  - 
M3  - 
LB  - 
VL  - 
ER  -