What can company data tell us about financing and investment decisions?

Capital markets play an important role in financing UK companies. Since 2009, corporate bond issuance has been strong, and yet aggregate UK business investment has remained weak. In part, this pattern of company behavior can be explained by companies choosing to issue bonds in order to reduce other...

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Bibliographic Details
Published inBank of England. Quarterly Bulletin Vol. 53; no. 4; p. 361
Main Authors Farrant, Katie, Inkinen, Mika, Rutkowska, Magda, Theodoridis, Konstantinos
Format Trade Publication Article
LanguageEnglish
Published London Bank of England. Economics Division. Bulletin Group 01.10.2013
Subjects
Balance sheets
Bank loans
Bond issues
Bond markets
Capital markets
Corporate bonds
Decision making
Economic crisis
Equity
Equity stake
Financial institutions
Financial performance
Investments
Studies
United Kingdom > UK
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Summary:Capital markets play an important role in financing UK companies. Since 2009, corporate bond issuance has been strong, and yet aggregate UK business investment has remained weak. In part, this pattern of company behavior can be explained by companies choosing to issue bonds in order to reduce other forms of debt, such as bank loans. But company-level data show that there is considerable heterogeneity in companies' investment behavior. Companies that use capital markets have increased their investment significantly since the trough in 2009. Their investment growth, however, fell in 2012, suggesting that other factors besides access to finance were also influencing companies' investment decisions at the time.
ISSN:0005-5166
2399-4568