The supply-side effect on the use of debt with very short and very long maturities

We find that the pre-documented factors influence debt maturity contingent upon credit accessibility and economic conditions. Firms reliant on bank loans avoid employing short-maturity debts even though they face severe information and agency problems. By contrast, firms with sufficient access use very short debt maturities to mitigate agency issues. When credit condition deteriorates, the former has no choice but borrow at the very short end of the maturity spectrum, whereas the latter evades refinancing risk more readily by borrowing at the end. Taken together, these findings indicate a vital role of capital supply in determining debt maturity.