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The theory of redistribution, which argues that individuals from higher-income groups are the primary holders of public debt, serves as the theoretical foundation for our research. The impact of redistribution based on the realization of receipts from interest on the public debt, cannot be entirely offset by the insufficient progressiveness of the tax system. Given that it significantly affects how income is distributed, the paper also considers the financial structure aspect, which is measured by the ratio of bank-based to market-based financing. The purpose of this paper is twofold. First, examine whether public debt increases inequality in income distribution, and second, test if the relative increase in market financing compared to bank financing increases inequality in income distribution. Thus, the paper investigates whether, in countries where public debt ownership is not distributed equally, public debt has a non-negligible effect on income transfer between different socioeconomic groups. The empirical part of this work was conducted using a dynamic panel model on a sample of 27 OECD member countries, for the period from 2004 to 2021. Precisely, we employ the Vector Error Correction Model (VECM). Research findings indicate that an increase in state borrowing results in a long-term redistribution of income from lower-income groups to higher-income groups. Conversely, an increase in the financial system’s emphasis on bank financing results in a short-term decrease in income inequality. So, while high levels of public debt are certainly a cause for concern, it is crucial to also consider the distribution of this debt within the economic policy-making process, and when evaluating its potential impact on economic inequality. Teorija preraspodjele, koja tvrdi da su pojedinci iz viših dohodovnih skupina dominantni nositelji javnog duga, služi kao teorijska osnova za naše istraživanje. Utjecaj preraspodjele na temelju realizacije primitaka od kamata na javni dug ne može se u potpunosti nadoknaditi nedovoljnom progresivnošću poreznog sustava. S obzirom na to da značajno utječe na način raspodjele dohotka, rad također razmatra aspekt financijske strukture, koji se mjeri omjerom financiranja temeljenog na bankama prema financiranju temeljenom na tržištu. Svrha ovog rada je dvostruka. Prvo, ispitati povećava li javni dug nejednakost u raspodjeli dohotka, a drugo, testirati povećava li relativno povećanje tržišnog financiranja u odnosu na bankovno financiranje nejednakost u raspodjeli dohotka. Stoga rad istražuje ima li javni dug, u zemljama gdje vlasništvo nad javnim dugom nije jednako raspodijeljeno, značajan učinak na prijenos dohotka između različitih socioekonomskih skupina. Empirijski dio ovog rada proveden je korištenjem dinamičkog panel modela na uzorku od 27 zemalja članica OECD-a, za razdoblje od 2004. do 2021. Preciznije, koristimo model vektorske pogreške korekcije (VECM). Prema rezultatima istraživanja, povećanje državnog zaduživanja dovodi do preraspodjele dohotka od nižih prema višim dohodovnim skupinama na dugi rok, dok povećanje naglaska financijskog sustava na bankovno financiranje rezultira kratkoročnim smanjenjem nejednakosti dohotka. Dakle, dok su visoke razine javnog duga zasigurno razlog za zabrinutost, ključno je također razmotriti raspodjelu tog duga unutar procesa donošenja ekonomske politike i pri procjeni njegovog potencijalnog utjecaja na ekonomsku nejednakost.

This article studies the transmission of financial shocks in a model where corporate credit is intermediated via both banks and bond markets. In choosing between bank and bond financing, firms trade-off the greater flexibility of banks in case of financial distress against the lower marginal costs of large bond issuances. I find that, in response to a contraction in bank credit supply, aggregate bond issuance in the corporate sector increases, but not enough to avoid a decline in aggregate borrowing and investment. Keeping leverage constant while retiring bank debt would expose firms to a higher risk of financial distress; they offset this by reducing total borrowing. A calibration of the model to the Great Recession indicates that this precautionary mechanism can account for one-third of the total decline in investment by firms with access to bond markets.

We examine the importance of industry to firm-level financial and real decisions. We find that in addition to standard industry fixed effects, financial structure also depends on a firm's position within its industry. In competitive industries, a firm's financial leverage depends on its natural hedge (its proximity to the median industry capital-labor ratio), the actions of other firms in the industry, and its status as entrant, incumbent, or exiting firm. Financial leverage is higher and less dispersed in concentrated industries, where strategic debt interactions are also stronger, but a firm's natural hedge is not significant. Our results show that financial structure, technology, and risk are jointly determined within industries. These findings are consistent with recent industry equilibrium models of financial structure.

We test whether the amount and/or quality of financial statement information affects the financial structure of small and medium-sized enterprises (SMEs). Belgian SMEs are used, because there are important differences in disclosure and audit requirements among them. Consistent with the traditional view that asymmetric or incomplete information restricts access to external funds, our results indicate that both the amount and quality of financial statement information are positively related to SME leverage. In addition, we find that leverage is positively related to asset structure, growth (prospects) and median industry leverage, and negatively related to firm age and profitability.

When financial investors' portfolio holdings are unconstrained, financial economies are assumed, w.l.o.g., to have no redundant assets. Indeed, eliminating redundant assets allows to replace the initial financial structure by an equivalent one, i.e., one that has the same consumption equilibria. Moreover, at the end of the process, absence of redundant assets guarantees that the set of admissible portfolio allocations is bounded, a fundamental property for the existence of equilibria. In the presence of institutional (exogenous) portfolio constraints, eliminating redundant assets is not innocuous anymore since bounded arbitrage may persist at equilibrium, the law of one price does not hold, and some zero-income portfolios may not be free. The goal of the paper is to replace the elimination of redundant assets by the elimination of useless portfolios, a process that eliminates in particular Werner useless portfolios, but needs to go beyond to obtain the boundedness of the set of admissible portfolio allocations at the end of the purification process. Moreover, the elimination process is carried out without affecting the set of consumption equilibria, hence replacing at each step the financial structure by an equivalent one.

We examined the impact of corporate diversification and financial structure on the firms' financial performance. We collected data from 520 manufacturing firms from Pakistan, India, Sri Lanka, and Bangladesh. We used panel data of 14 years from 2004-2017 to analyze the results. We applied a two-step dynamic panel approach to analyze the hypotheses. We found that product diversification and geographic diversification significantly affected the firms' financial performance. We further found that dividend policy and capital structure had a significant impact on the firm's financial performance.

We present a model with agency costs where heterogeneous firms raise finance through either bank loans or corporate bonds and where banks are more efficient than the market in resolving informational problems. We document some major long-run differences in corporate finance between the United States and the euro area, and show that our model can explain those differences based on information availability. The model fits the data best when the euro area is characterized by lower availability of public information about corporate credit risk relative to the United States, and when European firms value more than United States firms banks' flexibility and information acquisition role.

Objective: To determine the influence of project finance structuring on sustainability of Special Economic Zones in Kenya.   Theoretical Framework: The study was grounded on Triple Bottom Line and agency theories to analyze how project finance structuring influence economic, social, and environmental sustainability of Special Economic Zone projects.   Method: The study was framed within a positivistic research paradign and cross-sectional survey design was used. Target population was 64 Special Economic Zone projects within 12 Special Economic Zones in Kenya. Data collection was carried out through structured questionnaires. Using a quantitative approach, data were analyzed through correlation and regression techniques, with reliability and validity tests ensuring data collection tools quality.   Results and Discussion: The results revealed a statistically significant and moderately positive relationship between project finance structuring and sustainability of SEZ projects. Regression analysis demonstrated that project finance structuring accounts for approximately 28.3% of the variance in sustainability outcomes. Limitations related to the study’s explanatory power and the omission of other influencing factors are acknowledged.   Research Implications: Practically, the findings guide SEZ policymakers, financiers, and project managers in designing more sustainable finance models. Theoretically, the study enriches existing literature by integrating Agency and TBL theories to explain the structural underpinnings of SEZ sustainability. Impacted areas include public infrastructure planning, private sector investment, and sustainable development policy.   Originality/Value: This study adds empirical evidence to a limited body of knowledge on SEZ finance structuring in emerging economies. It advances theory and practice by demonstrating how financial structuring influences sustainable development in the SEZ context.

The role of risk assessment and capital structure is vital for the sustainable growth of firms and increasing the shareholders' wealth. This research explores the correlation between firm risk and capital structure using datasets from the sugar and cement sectors of Pakistan as a developing economy. This study is unique as it involved two firms of different nature (sugar firms operate seasonally while cement firms operate yearly) to view the real picture on the impact of risk and structure assessment on firms' credibility and shareholders' wealth. For this purpose, 15-year data (2000-2014) containing the financial statements of the target sectors were collected and the ANOVA analysis was applied with credit risk, liquidity risk, systematic risk, and firm size were used as the regressor variables, firm growth and dividend payout ratio as the control variables, and leverage as the regression variable. The findings showed that credit risk and liquidity risk are significantly correlated with leverage. This suggests that decision-makers pertaining to firms' risk and efficiency must focus more on risk to pursue a stronger and sustainable increase in shareholder wealth.