Tag Archives: debt

A Recurrence of Financial Distress for Borrowers with Student Loans 

By | August 11, 2023

In the world of student loans, things look grim. Borrowers owe an estimated $1.6 trillion in student loans—a figure which is second only to mortgage debt in the total amount of consumer debt attributed to Americans. Student loan borrower were hopeful that the Biden administration—which promised to provide up to $20,000 in relief for student… Read More »

The Law of Creditors, Debtors, and Redeemers

By | July 24, 2023

Even before law school, I became fascinated by what is sometimes called the “law of creditors and debtors.” This cat-and-mouse game between creditors and the people who owe them money was intellectually stimulating—and, I realized, terribly important. Even though the first year of law school focuses on liability, debt collection becomes all-important when judgment debtors… Read More »

How Does Deleveraging Affect Funding Market Liquidity?

By | August 31, 2022

Financial institutions are highly leveraged due to the extremely low interest rates of the past decade. However, interest rates are now rising worldwide due to inflationary pressures, which can lead to plunging stock markets and significant deleveraging of financial institutions. Policymakers, academics, and practitioners are concerned about the impact of deleveraging. In our recent paper,… Read More »

State Ownership and Corporate Leverage around the World

By | June 1, 2022

Corporate indebtedness has risen sharply in the wake of the global financial crisis as low interest rates enticed many firms to issue bonds and borrow from banks. This debt surge occurred in developed countries and emerging markets alike. As a result, the total debt of non-financial companies increased from 84 percent of global GDP in… Read More »

How Does Removing the Tax Benefits of Debt Affect Firms? Evidence from the 2017 US Tax Reform

By | August 3, 2021

Almost all countries around the world have historically allowed businesses to write off interest expenses against taxable income. Critics argue that the tax-favored status of debt has created a corporate debt pileup, thereby exacerbating economic downturns. This argument, which gained more attention after the 2008 global financial crisis, implicitly assumes that the tax incentives have… Read More »