Understanding Corporate Borrowings Literatures: A Systematic Literature Review and Bibliometric Approach

Financial resources are the basic requirement for commencement, carrying on and survival of any business. The financial resources for the business can be acquired from the owner of the business in the form of equity or from the outsiders in the form of borrowings. The financial resources, be they borrowings or equity and their strategic implementation have a significant bearing on the company’s performance.^[1] Each source of financial resources caries cost to the company and dictates the application of such resources. In a friction free market as stated by Modigliani & Miller,^[2] there is no difference in the choice between equity and debt as far as the management’s objective of firm value maximization is concerned. However, the market in reality grapples with lot of frictions thereby creating a wedge between the equity and borrowings. Corporate borrowing is a crucial source of finance and gaining growing popularity. But the management must carefully consider this option when making financial decisions as it brings tax shield benefits and magnifies return to the equity shareholder as well as brings costs in the form of fixed charges, bankruptcy and financial distress. It means borrowings involve both benefits and costs which in turn can elevate or dampen the firm value. On the other hand, though equity is the owner’s capital and does not bring fixed charges for the firm but it carries higher degree of risk and higher cost of fund thereby puts an ambivalent effect on firm value. Hence, financial managers face challenges in balancing the need for value maximization and the choice of sources of funds for the business. Further, in recent times, the responsibility of financial managers to operate in a socially and environmentally responsible manner^[3] redefines the nexus of the sources of funds with firm performance and value. Therefore, recognizing the importance of borrowings in business sustainability, in the last two decades researchers have given significant attention to analyze various factors that affect corporate borrowings and their relationship with firm performance.

Though, a significant number of researches have been undertaken across the globe concerning corporate borrowings, there is no such work has been made to synthesize all those studies. The very objective of synthesizing these studies is to give a full picture of the exiting literature on corporate borrowings and its connected dimensions so as to develop a thorough understanding about the extent to which the development of existing literature has reached. Further, this synthetization helps in identifying the unexplored dimensions of corporate borrowings which can be taken up as a future research area so that new insights on this field can be added to the existing knowledge base.

So, this paper aims at conducting a depth review of studies on corporate borrowings by making a Systematic Literature Review (SLR), Bibliometric Analysis and Content Analysis to find out some Queries (Q) for further research agenda. In doing so, this paper tries to answer the following queries:

Q.1: What is the current publication trend in the field of corporate borrowings?
Q.2: Which countries and institutions are most active in this research field?
Q.3: Which are the most influential journals in this field?
Q.4: Who are the most influential authors and what is the authorship pattern of worldwide research output?
Q.5: Which themes of corporate borrowings are most popular among the researchers?
Q.6: Which areas of corporate borrowings require more attention from researchers?

Due to widespread research in this field, this paper attempts to analyse and find the gap in the field of corporate borrowings. This study also gives a comprehensive knowledge about earlier literatures on corporate borrowings. This study is a novel attempt and different from other work because no study has been conducted on this topic. Further, considering both Scopus and Web of Science database makes this study a comprehensive one. This study holds the potential to assists the researcher in gaining an in-depth knowledge on the field of corporate borrowing for the future studies.

The subsequent sections of this paper deals with the literature review succeeded by methodology, analysis, conclusion and future research directions.

In this study, we have used a mix of bibliometric analysis, SLR and content analysis. SLR is scientific, transparent and imitable process. It is superior to traditional narrative reviews^[4] in various ways such as better quality of review process and results,^[4–6] curtail bias and errors,^[7] strong validity of the process as its steps are replicable at the time of review,^[8] offers data synthesis and literature mapping of a specific research topic,^[4] and it also provides an outline that incorporates existing knowledge to academics and practice.^[4,7] SLR also reduces bias through comprehensive literature searches of published and unpublished documents and by providing an audit trail of the reviewer’s decisions, procedures and conclusions.^[9] In the context of review of studies, SLR allows to categorized a large number of data and determine a framework to establish the main trends in existing studies.^[9]

Figure 1:
Data extraction process.

The bibliometric analysis is a popular and attentive method for explaining and mapping the cumulative scientific knowledge and evolutionary nuances of a specified fields by analysing large volumes of unstructured data in precise ways.^[10–13]

In this paper, our methodology has been divided into two parts: first comprises of identifying, reading and understanding significant papers; second comprises of bibliometric examination and visualization of the selected papers. Figure 1 describes the data extraction process.

Data are extracted from Scopus and Web of Science database which are reputed, trusted and largest databases for publications and citation of literature. According to Gonzalez & Gonzalez,^[14] in the field of social science, Scopus is a popular index having 14,000 publications related to finance themes. Scopus categorises 14 types of documents and sources. Further, social science citation index of Web of Science is also world’s leading scientific and technical journals that contains over 3,400 journals.

Earlier very few studies have conducted bibliometric analysis which are indirectly connected to corporate borrowings. Additionally, earlier studies have used data of either Scopus or Web of Science database. So, this paper has a novel attempt to systematically review the literature on corporate borrowings taking data from both Scopus and Web of science database which have made this research more comprehensive. The data has been collected from both database over the period from 1994 to 2022. The appropriate search terms “Corporate borrowings” OR “Corporate debts” OR “Corporate leverage” OR “Corporate credit” OR “Firm debts” from Title, Abstract, Author keywords have been used which resulted into 426 documents from Web of Science and 503 documents from Scopus after applying all relevant filters. Then both data were combined and 90 duplicates have been removed with the help of ‘R-studio’ software package, thereby leading to 839 documents. All the 839 documents are manually reviewed and 131 documents, including 62 documents with missing keywords, are found irrelevant and hence excluded. Finally remaining 708 documents are taken as the final sample for analysis.

Figure 2:
Research structure of this study. TP=Total production, TGC=Total global citation, TLC=Total local citation, SD=Sankey diagram, CoC=Co-citation count, CoA=Co-authorship count, DOC=Degree of centrality, KF=Keywords frequency, TSA=Thematic structure analysis, BL=Bradford’s law.

After shortlisting 708 documents, we have used biblioshiny (a web-interface of R-studio software) and VOSviewer (a bibliometric mapping and visualization software tool) for analyzing the analytical structure of the study. Figure 2 illustrates the analytical structure of research.

The analysis identified 708 documents (both Scopus and Web of Science) published during 1994 to 2022 of which all are articles and published in English language. The 708 documents have 1487 authors and 1915 author’s keywords. Table 1 provides all other basic information about the bibliographic data used in this analysis.

To examine publication trend in the field of corporate borrowings, we analysed annual growth trend of publication. Figure 3 shows the annual publication growth in corporate borrowings literature. Total 708 documents have published in this field. In 1994, the first document was published. Till 2003, single digit documents have been published and there is no document in 2004. In 2005, publication has grown up moving to double digit number and it continued. The trend demonstrates that from 2019, the area of corporate borrowings has attracted the researcher and it has received continuously increased publication. The probable reason behind this increased trend is the financial and liquidity imbalances in corporate world during COVID-19. According to Ding W et al.,^[15] the corporate debt conditions, both long-term and short-term, have been amplified as compared to pre-2020. Similarly, Umar Z et al.^[16] demonstrate that bonds issued by the financial sector were more resilient or better able to withstand liquidity crunch during periods of financial stress compared to corporate and sovereign securities. So, it reveals that the COVID-19 pandemic has impacted the corporate debt which has attracted the researchers. Further, we separated the growth period of corporate borrowings into three parts such as initial stage (1994-2004) having 32 documents, pre-expansion stage (2005-2016) having 259 documents and expansion stage (2017-2022) having 417 documents.

Table 2 shows that the corporate borrowings have attracted the research from top 25 countries. USA, UK, China and Germany are the top contributor in the field of corporate borrowings having 29%, 13%, 8% and 7% of contribution respectively. Further, maximum countries’ contribution ranges between 2% to 5%. In fact, 8 countries having their contribution of 1% or less than 1% and 13 countries’ contribute 2% to 5%. It means the majority of countries are the new participant in this field and India is one of them. So, we can say that it is one of the scopes in those countries to conduct research in this field. Additionally, in case of citation, Canada is the leading country and 2^nd is USA which shows that these country’s work has got wide acknowledgement in the field of corporate borrowings and on the basis of Corresponding author USA, UK and China are top countries to initiate this work. This analysis reveals that majority of countries including India have a wide scope for research in the field of corporate borrowings. This information is also visualized in Figure 4.

Figure 3:
Annual growth trend of publication.

On the basis of our dataset, total 1046 institutions have worked on corporate borrowings. Table 3 shows that University of Barcelona, University of Chicago, University of Glasgow, University of Warwick and University of Zurich are the most active institutions in the field of corporate borrowings among top 15 producing 9 articles each. Maximum number of institutions are situated in USA and UK which are the most active countries in this field.

Table 4 shows the top 15 productive journals and among them, Journal of Financial Economics and Journal of Corporate Finance are the most productive journals by publishing 82 articles in the field of corporate borrowings which is around 37% among top 15 journal’s publication. Journal of Banking and Finance, International Review of Financial Analysis and Applied Economics are almost same productive journals by publishing 16, 15 and 15 articles in the position of 3^rd, 4^th and 5^th among the top 15 journals in this field. To find the trendy journal, we analyzed Figure 5 and found that though Journal of Financial Economics and Journal of Corporate Finance are the oldest journals (since 1994) but Journal of Financial Economics still trending in publication in this area. After 2004, Journal of Corporate Finance is a growing journal in this area and after 2008, some journal like Journal of Banking and Finance, International Review of Financial Analysis and Applied Economics are giving more interest in corporate borrowings field.

Figure 4:
Leading country in corporate borrowings.

Bradford’s law is a pattern that estimates the exponentially diminishing returns of looking for references in scientific journals. Samuel C. Bradford initially introduced it in 1934. Generally, it is used to find the ‘core’ journal in a discipline. According to Alabi G,^[17] “if the journals containing articles on a given subject are arranged in descending order of the number of articles they carried on the subject, then successive zones of periodicals containing the same number of articles on the subject form the simple geometric series 1: n: n²: n³ where ‘n’ is a multiplier”. In this article, to identify the core journal in the area of corporate borrowings, we have used Bradford’s law through Biblioshiny software and the result is exhibited in Figure 6. The figure shows that Journal of Financial Economics, Journal of Corporate Finance, Journal of Banking and Finance and Applied Economics are top 4 journals in the field of corporate borrowings. As one of the top platforms for the corporate borrowings area, these journals can be recommended and targeted for publication.

Figure 5:
Growth of journals over time.

As per the information provided in Table 1, in the area of corporate borrowings, 1487 authors have worked with a structure of 113 single author documents and 1374 multi author documents. Table 5 depicts the top 20 contributing authors in this area and it reveals that ‘Faff R’ and ‘Wang C’ are the highest contributing authors by publishing 5 articles each followed by ‘Arena M’, ‘Boubaker S’, ‘Chen N’, ‘Hackbarth D’, ‘Kraft P’ and ‘Tan K’ having 4 articles each. ‘Goyal V’ is an earliest author who started work on this field in 1999 and he is having a highest citation of 1038. ‘Morellec E’ is the second earliest author who started the work in 2001 and is having the second highest citation of 391. On the basis of h-index, the top 5 authors are having the same numbers except second one and in the g-index, top 2 authors are having highest numbers. The h-index is a strong estimator of the total impact of a scientist’s contribution on a research field.^[18] While g-index, as said by Hirsch JE,^[18] is the relationship between published articles and their level of citation.

Figure 6:
Core journals as per Bradford’s law.

Figure 7 indicates highly producing authors on corporate borrowings over time. The line represents author’s timeline, the size of the bubble is proportional to the number of documents published and the colour intensity of the bubble is proportional to the total citation received by the document. In line with Table 5, the Figure 7 also indicates that ‘Goyal V’ is the highest cited author among the top contributing authors and ‘Hung M’ is long-time author in this area.

This law details the regularity of authors’ productions on a specific field. It is also called ‘the inverse square law of scientific productivity’.^[19] Generally, it explains the relationship between authors and the number of documents they produce. Coile RC^[20] proved that ‘the applicability of Lotka’s law to humanities and to map librarianship may have misinterpreted Lotka’s law and have concluded inaccurately that the law applies to these fields’. This law is frequently used to analyze different subjects including social network analysis,^[21] business ethics,^[22] and financial risk.^[23] Lotka’s law states the common pattern in the distribution of authorship and publication productivity. The Table 6 shows that a small number of authors have written a large number of papers and a large number of authors have written only a few papers. The relation is expressed as:

Where y_x is the number of authors making x contributions to the subject. Further, n and c are the two constants to be estimated for the specific set of data.^[24] The frequency distribution of scienticfic productivity as per Lotka’s law is shown in Figure 8. The Table 6 describes that among the total 1487 authors, 87% of them have contibuted by publishing only one paper, around 11% authors produced only two paper and less than 2% of authors have published three paper or more. It shows that majority of authors i.e, 87% are new authors in this field. Thus, we can assure that there is a lot of scope for research on corporate borrowings area as a steady author.

Figure 7:
Top author’s production over time.

Figure 8:
Authors productivity as per Lotka’s law.

Table 7 shows the top 15 relevant documents on the basis of local citation out of 708 documents. Citation indicates a document’s popularity and influence within the scientific community.^[25] Global citations are the total number of times an article has been cited in other works, including research in different field and Local citations indicate the citaion of an article within the network.^[26] Table 7 states that ‘Custodia C., 2013’ document is the most relevant document. The paper title is “Why are US firms using more short-term debt?” which is published in ‘Journal of Financial Economics’ in 2012. Basically, the paper has attempted to examine why long-term debt with maturity period more than 3 years has decreased in USA during 1976 to 2008. The author found that decreasing of long-term debt is maximum among small firms. Further, the author found that a higher degree of information asymmetry is responsible for the decrease in usage of longer-term debt. Overall, the paper says that size of firm, age of firm and infromation asymmetry affect the corporate borrowings.

Figure 9 shows the three-field plot for the country, keywords and journal. Sankey diagram has been used to visualize how these three fields interact. According to Stasko & Ward,^[27] Sankey diagrams are frequently used to represent the movement of materials or energy throughout various networks and processes and now it is being used in other domain also.^[28] The size of the rectangular boxes in this graph corresponds to the frequency of occurrence. So, we can say that USA is the active country in this domain and their maximum focused theme is ‘capital structure’ and ‘corporate debt’ and these themes have dominated in Journal of Financial Economics and Journal of Corporate Finance. UK is the second leading country focusing on ‘capital structure’, ‘cridit risk’, ‘corporate debt’ and ‘debt maturity’. Major countries including India have less focus in ‘debt structure’, ‘debt financing’, and ‘corporate leverage’ theme which paves a scope for research on these themes.

Citation network analysis is a technique for measuring the relative importance of an article by counting how many times it has been cited in other works. Using VoSviewer software, we have formed a threshold to analyse most cited document. In the threshold, we have taken atleast 50 citations of an article and found 67 articles for the analysis which is presented in Figure 10. The outcome shows that Frank et al.^[29] is the most cited document in the area of corporate borrowings and Duffie & Lando^[30] is the second highly cited document in this field.

To analyze the author’s collaboration in the corporate borrowings field, we analyzed the author’s collaboration network. According to Singh G et al.,^[31] collaboration among researchers is a representation of their intellectual relationship in scientific research. In this context, Figure 11 identifies that out of 1487 authors, there are only 10 collaborations among the authors. ‘Wang C’, ‘King T’, ‘Chiu W’, ‘Ignacio PJ’ and ‘Prevost A’ have a large collaboration in this field of corporate borrowings and ‘Guney Y’, ‘Paudayal K’ and ‘Antoniou A’ is the second largest group in this field. Remaining collaborations consist of two authors. Thus, we can consider that corporate borrowings domain research collaboration confined to few authors.

Keywords in an article indicate the logical explanation of the content of the document. Two keywords of an article are said to co-occur if they both occur in other articles.^[32] According to Christensen et al.,^[33] the relationship between two keywords is expressed by their link, which is represented by a numerical value and it is assumed that higher the number, stronger the link. In this analysis, we have taken those keywords which are having at least five time occurrence (the default setting of VoSviewer software) in other work. In our dataset, 1945 authors’ keywords are there. Out of this, only 85 keywords meet the threshold limit. Figure 12 shows that ‘Capital structure’ has garnered the interest of researchers. Similarly, other keyword’s occurrence and their link strength are given in Table 8.

Co-citation is the frequency of two article cited together by other.^[34] Co-citation analysis is applied to identify linkages between articles. This strategy is based on the idea that when two publications are cited in other articles, they are more likely to have similar research backgrounds. To highlights the intellectual structure of articles, the co-citation analysis is a well-known analysis in the bibliometric network.^[14,35–38]

Further, the aim of cluster analysis is to organize a collection of articles into groups where the articles are more similar to one another than to those in other groups. Cluster analysis helps to identity collaboration patterns and interrelation among a co-citation analysis. According to Bellenguez C et al.,^[39] an iterative approach called the ‘Louvain algorithm’ is used to find the number of partitions that will optimize the ‘Modularity Index’. It is the default cluster building algorithm in Biblioshiny. According to this algorithm, we found 2 clusters in the area of corporate borrowings. Cluster 1 is comprising of 21 documents and cluster 2 is the largest cluster having 28 documents.

Figure 9:
Three-field analysis through Sankey diagram.

Figure 10:
Citation network analysis.

We conducted a content analysis of two clusters obtained from citation analysis to determine the intellectual structure of research on corporate borrowings. We identified the top 10 central papers in each cluster to determine the research emphasis of each cluster. These papers provide an overall explanation of each cluster. Xu K et al.^[40] suggests that the ‘PageRank’ algorithm can be utilized to determine the intellectual structure of research. Specifically, in a co-citation network, the ‘PageRank’ algorithm considers two factors: the number of times a research paper is co-cited with other research papers (popularity measure) and the number of times it is co-cited with highly co-cited papers (prestige measure). To determine the lead papers in each cluster, we used Biblioshiny software to calculate ‘PageRank’. Table 9 provides a detailed narrative of 20 articles (10 from each cluster) based on their content.

Figure 11:
Co-authorship analysis.

Figure 12:
Keyword co-occurrences network analysis.

The first cluster of 21 articles has centered around the impact of firm’s capital structure on financial performance. This cluster comprises of studies that examine empirical evidence and how it relates to corporate finance decisions in the real world. Authors^[41–44] argued that differences in financial intermediation, institutional structures governing bankruptcy and debt renegotiation leads to corporate debt in capital structure across the globe. Concurrently, Leland HE^[45] examined that the value of debt and its optimal capital structure are closely connected and one cannot be understood fully without considering the impact of the other. According to Modigliani & Miller,^[2] the cost of capital can be used for rational decision making and Lamont et al.^[46] highlighted that the concept of financial constraint and unconstraint conditions for the firm is based on the cost differential between external and internal financing. Another viewpoint is that to determine optimal capital structure of a firm, both amount and maturity of the debt must be considered.^[47]

Cluster 2 is the largest cluster with 28 articles. These articles mostly emphasize on the determinants of corporate borrowings. Information asymmetries^[48] is one of the major determinants of corporate borrowings. It means that if insiders within a company, who have access to more information and insights about the company’s operations and prospects than the general public, decide to issue securities (such as stocks or bonds), they are more likely to issue securities when the market perceives the company to be overvalued. This is because insiders can take advantage of their superior knowledge to earn profit from the high prices that outside investors are willing to pay for the securities.^[49] According to Myers SC,^[50] amount and maturity of debt liabilities are the operative determinants which affect the growth opportunities and leverage risk. So, companies should assess their financial position, market conditions and growth prospects to determine the appropriate amount and maturity of debt. Debt financing can be an effective tool for reducing conflicts between managers and shareholders in firms with large free cash flows. By using debt to finance investments, companies can limit the amount of free cash flow available to managers and align their interests with those of shareholders.^[51] Overall, this cluster highlights the importance of careful consideration and management of corporate borrowings by taking various factors into account that can impact a company’s financial position, risk profile and growth opportunities.

With this in-depth analysis of corporate borrowings literatures, we identify many factors that restrict research in this field despite of its continuing growth.

Cooperation among researchers enhances the effectiveness of researchers, lowers the cost of conducting research and facilitates the flow of information.^[52] From co-authorship analysis, we identified that there are few authors collaboration in this field. So, to make it an internationally recognized framework, international cooperation is highly desired.

According to active or leading country analysis, only some specific developed countries such as the USA, UK, etc. have frequent focus in this field. This is because, lower interest rate in advanced economies have encouraged the borrowings (IMF, 2015).

Multi-firms datasets are preferred by certain researchers in order to generalise the study on corporate borrowings across corporate sector. However, industries may vary according to ownership, size of firm, different product and services and other characteristics. Hence, borrowings on specific sector firms require additional focus because of their different investment strategy and financing patterns. Further, there is also deficiency in debts comparison among firms from different sectors like manufacturing sector and service sector etc. which can help in making comparative studies.

In maximum economy, the SMEs sector is most dynamic and makes a significant contribution to GDP. In India’s socio-economic growth, SMEs play a vital role which generate nearly 8% of GDP.^[53] So far, only few studies have concentrated on borrowings of small firms.

According to studies, corporate borrowing is a crucial element of financial management that provides required capital for establishing the business, sustaining the operations, expanding business prospects, managing their cash flow requirements etc. The evaluation of the ideal capital structure and the valuation of debt are closely linked.^[45] Based on the current study, it appears that despite the worldwide involvement of authors in the field, their relationships with each other are similar and limited to those within their respective countries or regions. In essence, the authors network within the field are characterized by a lack of diversity and international cooperation. Furthermore, this study has recognized the most impactful and prestigious research works in this discipline, which possess a significant influence beyond what their worldwide and local citations may indicate. Through keyword co-occurrence analysis, it is observed that scholars concentrate on certain topics such as capital structure, debt maturity, corporate debt, etc. and among these, the concept of ‘capital structure’ has gained the most attention. However, the findings also highlight a significant vacuum in the exploration of areas such as information asymmetry, Environmental, Social & Governance (ESG) and Economic Policy Uncertainty (EPU) aspects concerning corporate borrowings. Further, examining the dynamics of information asymmetry and how it affects corporate borrowings decisions can provide important insights for managing the corporate risk. Similarly, analysing how EPU affects corporate borrowings behavior can provide a nuance understanding of how external economic factors influence financing decisions. Furthermore, integrating ESG factors in the conversation about corporate borrowings can contribute to the growing emphasis on sustainable financial management. By considering these underexplored areas, future studies can contribute to a more comprehensive understanding about corporate borrowings.

This research has multiple significant contributions to the field of corporate borrowings. Firstly, it investigates the growth trend in this area by analyzing the yearly publications and contributions made by authors, countries and institutions. Secondly, it identifies the most influential studies in this field and uncovers the prominent themes and intellectual structure through co-occurrence and co-citation analysis. This helps the researchers to avoid stagnation and enables the field to move forward. Thirdly, this study uses both bibliometric analysis and systematic literature review methods to thoroughly and impartially investigate the literature related to corporate borrowings. Moreover, it identifies various obstacles that hinder the development of knowledge in this field.

Our research utilized bibliometric analysis and systematic literature review to provide a comprehensive understanding of borrowings in the corporate world. However, it is important to acknowledge that our study has limitations. Firstly, it only considers articles published from 1994 to 2022. Secondly, the choice of keywords is based on the definition of corporate borrowings and it is possible that new keywords may emerge in future.

We are very much grateful to the Editor Prof. Sujit Bhattacharya and the two anonymous reviewers of this article whose constructive comments helped us to improve the quality of this article.