Public Debt, Bank Debt, and Non-Bank Private Debt in Emerging and Developed Financial Markets

Using an effective sample of 3,453 observations selected from the Taiwanese stock exchange, this study documents and attempts to reconcile divergent outcomes from the extant literature on debt structure (public, bank, and non-bank private debt). Sampled firms from this emerging market generally acquire debt from both public and private sources, with a strong preference for bank debt, suggesting, among other things, that bank debt and public debt compliment each other rather than acting as substitutes. Four interesting alternative explanations are provided in an attempt to reconcile the contra indicative results that arise when modeling the use of public debt