01938cas a2200253 a 4500 AALejournalIMF013349 230101c9999 xx r poo 0 0eng d 5.00 USD 9781475564440 1018-5941 BD-DhAAL BD-DhAAL Agca, Senay. Fiscal Consolidation and the Cost of Credit : Evidence from Syndicated Loans / Senay Agca, Deniz Igan. Washington, D.C. : International Monetary Fund, 2013. 1 online resource (44 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students We examine how the cost of corporate credit varies around fiscal consolidations aimed at reducing government debt. Using a new dataset on fiscal consolidations and syndicated corporate loan data, we find that loan spreads increase with fiscal consolidations, especially for small firms, domestic firms, and for firms with limited alternative financing sources. These adverse effects are mitigated substantially if consolidations are large, and can be avoided if consolidations are also accompanied with more adaptable macroeconomic policies and implemented by a stable government. These findings suggest that lenders price the short-term recessionary effects in loans but large consolidations can reduce or undo the increase in spreads, especially under favorable country conditions, by signaling credibility and creating expansionary expectations. Mode of access: Internet Igan, Deniz. IMF Working Papers; Working Paper ; No. 2013/036 Full text available on IMF http://elibrary.imf.org/view/journals/001/2013/036/001.2013.issue-036-en.xml IMF e-Library