To what extent do public firms switch to bonds when bank credit supply falls, and how do their real outcomes compare to those of other firms? Examining four U.S. crises during 1988–2011 shows that only 8.4% of debt-receiving firms broke their reliance on loans and switched to bonds. These were high quality firms that, despite incurring large costs, did not suffer significantly more in output, investment, and employment than predominantly bond-issuing firms. Most firms either received loans, or no debt, and fared significantly worse. Thus, public firms do not widely substitute bonds for loans, remaining vulnerable to bank health fluctuations.

We examine how firm performance is associated with social diversity among corporate directors, proxied by diversity along religion and caste, a deep-rooted institution dividing India’s Hindu society into hundreds of communities. To identify directors’ social identities, we build one of the first data-driven mappings of last names to caste and religion. We find that Indian corporate boards are strikingly homogeneous (i.e. lack diversity) during 1999–2015. Using four instrumental variable strategies, we find that board homogeneity is negatively related to firm performance. We find that the negative impact of board homogeneity is due to overlapping views and networks of caste-proximate directors and cronyism impairing their monitoring and advising roles.