Press Reporting of Debt Choices

Book excerpt: Previous studies on incremental financing compare a subset of reported bank loans to full samples of public debt and non-bank private debt. However, if reported loans are a non-representative subset of the loan universe, the analysis of incremental financing decisions should also consider non-reported loans. In order to address this issue, the reporting frequency and determinants of a set of bank, public and non-bank private debt agreements are examined. Overall, between 1996 and 2004, and although reported loans and borrowers differ significantly from non-reported loans and borrowers, the factors that determine the choice between bank, public debt and non-bank private debt do not change whether reported loans or all loans are considered. In consequence, one could argue that non-reported loans are, though more transactional, still substantially different from public debt.