Showing papers by "Juan M. Sánchez published in 2016"
TL;DR: In this article, a dynamic contract model is embedded into a general equilibrium setting with competitive intermediation, where the terms of finance are dictated by an intermediary's ability to monitor and control a firm's cash flow, in conjunction with the structure of the technology that the firm adopts.
Abstract: What is the role of a country's financial system in determining technology adoption? To examine this, a dynamic contract model is embedded into a general equilibrium setting with competitive intermediation. The terms of finance are dictated by an intermediary's ability to monitor and control a firm's cash flow, in conjunction with the structure of the technology that the firm adopts. It is not always profitable to finance promising technologies. A quantitative illustration is presented where financial frictions induce entrepreneurs in India and Mexico to adopt less-promising ventures than in the United States, despite lower input prices.
70 citations
TL;DR: In this paper, the authors study the behavior of small and large firms during episodes of credit disruption and extend the analysis to the 2008 financial crisis and NBER-dated recessions, finding that large firms' short-term debt and sales contracted relatively more than those of small firms during the 2008 crisis and during most recessions since 1969.
45 citations
TL;DR: In this article, a dynamic contract model is embedded into a general equilibrium setting with competitive intermediation, and the ability of an intermediary to monitor and control the cash flow of a country plays an important role in a …rm's decision to adopt a technology.
Abstract: What determines the technology that a country adopts? While there could be many factors, the e¢ ciency of the country’s …nancial system may play a signi…cant role. To address this question, a dynamic contract model is embedded into a general equilibrium setting with competitive intermediation. The ability of an intermediary to monitor and control the cash ‡ows of a …rm plays an important role in a …rm’s decision to adopt a technology. Can such a theory help to explain the
33 citations
TL;DR: In this article, the authors revisited the behavior of small versus large firms during the episodes of credit disruption and recessions in the sample extended to cover the 2007-09 economic crisis.
Abstract: Gertler and Gilchrist (1994) provide evidence for the prevailing view that adverse shocks are propagated via credit constraints of small firms. We revisit the behavior of small versus large firms during the episodes of credit disruption and recessions in the sample extended to cover the 2007-09 economic crisis. We find that large firms' short-term debt and sales contracted relatively more than those of small firms during the 2007-09 episode. Furthermore, the short-term debt of large firms also contracted relatively more in the previous tight money episodes if one takes into account the longer period that it takes for large firms' debt to reach its post-shock trough. Our findings challenge the view that propagation of shocks in the economy takes place via credit constraints of small firms.
8 citations
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TL;DR: Although the unemployment rate is strong these days, other labor-related statistics are being called weak for this stage of an economic recovery as discussed by the authors, however, the downward trend in labor force participation, wage growth, job reallocation and other stats started a long time ago.
Abstract: Although the unemployment rate is strong these days, other labor-related statistics are being called weak for this stage of an economic recovery. The downward trend in labor force participation, wage growth, job reallocation and other stats started a long time ago, however.
2 citations
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TL;DR: This paper developed a theoretically and institutionally plausible model of debt delinquency and bankruptcy, which reproduces the dynamics of default and bankruptcy and suggests an interpretation of the data in which lenders frequently reset the terms for delinquent borrowers, typically involving partial debt forgiveness.
Abstract: This paper documents and interprets two facts central to the dynamics of informal default or “delinquency” on unsecured consumer debt. First, delinquency does not mean a persistent cessation of payment. In particular, we observe that for individuals 60 to 90 days late on payments, 85% make payments during the next quarter that allow them to avoid entering more severe delinquency. Second, many in delinquency (40%) have smaller debt obligations one quarter later. To understand these facts, we develop a theoretically and institutionally plausible model of debt delinquency and bankruptcy. Our model reproduces the dynamics of delinquency and suggests an interpretation of the data in which lenders frequently (in roughly 40% of cases) reset the terms for delinquent borrowers, typically involving partial debt forgiveness, rather than a blanket imposition of the “penalty rates” most unsecured credit contracts specify.
1 citations
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TL;DR: The rapid declines in house prices, negative home equity, and the number of households in default all contributed to the dramatic increase in mortgage defaults during the Great Recession as mentioned in this paper, leading to a significant increase in home foreclosures.
Abstract: Rapid declines in house prices, negative home equity, and the number of households in default all contributed to the dramatic increase in mortgage defaults during the Great Recession.
1 citations
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TL;DR: Deleveraging may be caused by a declining willingness by households to borrow instead of a tightening of borrowing constraints, which leads to a decline in willingness to borrow.
Abstract: Deleveraging may be caused by a declining willingness by households to borrow instead of a tightening of borrowing constraints
1 citations
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TL;DR: In this paper, the authors revisited the behavior of small versus large firms during the episodes of credit disruption and recessions in the sample extended to cover the 2007-09 economic crisis.
Abstract: Gertler and Gilchrist (1994) provide evidence for the prevailing view that adverse shocks are propagated via credit constraints of small firms We revisit the behavior of small versus large firms during the episodes of credit disruption and recessions in the sample extended to cover the 2007-09 economic crisis We find that large firms’ short-term debt and sales contracted relatively more than those of small firms during the 2007-09 episode Furthermore, the short-term debt of large firms also contracted relatively more in the previous tight money episodes if one takes into account the longer period that it takes for large firms’ debt to reach its post-shock trough Our findings challenge the view that propagation of shocks in the economy takes place via credit constraints of small firms
1 citations
TL;DR: In this article, the authors study the internal organization of small business partnerships and focus on the number of owners and ownership structure and the dynamics of these variables, finding that partnerships tend to have a small number of partners with equal distribution of ownership shares.
Abstract: The authors study the internal organization of small business partnerships and focus on the number of owners and ownership structure and the dynamics of these variables. They find that partnerships tend to have a small number of owners with equal distribution of ownership shares. Moreover, while partnerships with equally distributed shares tend to keep this distribution constant, those with unequally distributed shares tend to move toward more equal distribution over time. The authors highlight that these facts are in line with the theory of private information in small business partnerships proposed by Espino, Kozlowski, and Sanchez (2014).
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TL;DR: Individuals younger than 46 deleveraged the most after the financial crisis of 2008 as discussed by the authors, and they were the most likely to default on their debts. But they did not report higher savings.
Abstract: Individuals younger than 46 deleveraged the most after the financial crisis of 2008.