TY  - JOUR
AU  - Brunnermeier,Markus K.
AU  - Yogo,Motohiro
TI  - A Note on Liquidity Risk Management
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14727
PY  - 2009
Y2  - February 2009
DO  - 10.3386/w14727
UR  - http://www.nber.org/papers/w14727
L1  - http://www.nber.org/papers/w14727.pdf
N1  - Author contact info:
Markus K. Brunnermeier
Princeton University
Department of Economics
Bendheim Center for Finance
Princeton, NJ 08540
Tel: 609/258-4050
Fax: 609/258-0771
E-Mail: markus@princeton.edu

Motohiro Yogo
Department of Economics
Princeton University
Julis Romo Rabinowitz Building
Princeton, NJ 08544
E-Mail: myogo@princeton.edu
AB  - When a firm is unable to roll over its debt, it may have to seek more expensive sources of financing or even liquidate its assets. This paper provides a normative analysis of minimizing such rollover risk, through the optimal dynamic choice of the maturity structure of debt. The objective of a firm with long-term assets is to maximize the effective maturity of its liabilities across several refinancing cycles, rather than to maximize the maturity of the current bonds outstanding. An advantage of short-term financing is that a firm, while in good financial health, can readjust its maturity structure more quickly in response to changes in its asset value.
ER  -