1 Which macroeconomic factors facilitate corporate financing?†

We investigate how monetary policy measures and the expected performance of the economy affect corporate debt decisions using an international sample. We account for the degree of financial constraints at the firm level and the degree of asymmetric information at the country level. We find that the monetary policy facilitates firms ’ access to debt regardless of their level of financial constraints and the level of availability of information about the borrowers. Our results also show that financially constrained firms borrow in a pro-cyclical way, while unconstrained firms increase their debt levels counter-cyclically. Constrained firms are more sensitive to macroeconomic conditions. Moreover, we also find that monetary expansions mitigate the impact of economic expectations on firms ’ debt for the financially constrained group, while an increase in the amount of money in the economy exacerbates the impact of the expected performance of the economy on firms ’ debt for the financially unconstrained group. Finally, when the level of information between borrowers and lenders is lower, the impact of the monetary policy on debt is stronger regardless of firms ’ degree of financial constraints. But the availability of information does not affect the relation between the expected performance of the economy and corporate leverage