Open AccessPosted Content
The Collateral Channel: How Real Estate Shocks Affect Corporate Investment
Reads0
Chats0
TLDR
In this article, the impact of real estate prices on corporate investment was studied and the sensitivity of investment to real estate values was found to be a function of local variations in real estate price as shocks to the collateral value of firms that own real estate.Abstract:
What is the impact of real estate prices on corporate investment? In the presence of financing frictions, firms use pledgeable assets as collateral to finance new projects. Through this collateral channel, shocks to the value of real estate can have a large impact on aggregate investment. To compute the sensitivity of investment to collateral value, we use local variations in real estate prices as shocks to the collateral value of firms that own real estate. Over the 1993-2007 period, the representative US corporation invests $0.06 out of each $1 of collateral.read more
Citations
More filters
Journal ArticleDOI
Uncovering Collateral Constraints
TL;DR: In this paper, the authors find that the commitment motive alone explains the increase in initial initial collateralization by 11 percentage points, controlling for the supply of collateral, but the same change in default risk leads to no change in collateralization.
Journal ArticleDOI
Within-bank spillovers of real estate shocks
TL;DR: In this paper, the authors study how real estate shocks are transmitted across bank's business areas while controlling for local demand shocks and bank location-specific factors, and find evidence of real estate price declines affecting both real estate and non-real estate types of lending.
ComponentDOI
Hazardous Lending: The Impact of Natural Disasters on Banks'Asset Portfolio
TL;DR: In this article, the authors studied how banks adjust their asset structure in response to changes in loan demand after natural disasters and found that U.S. commercial banks increase real estate lending after disasters and sell government bonds to finance such a disaster-driven demand surge.
Journal ArticleDOI
Creditor Rights, Technology Adoption, and Productivity: Plant-Level Evidence
TL;DR: The authors analyzed the effect of stronger creditor rights on productivity, using U.S. Census microdata and found that treated plants change the composition of their investments and their workforce toward newer capital and skilled labor.
Journal ArticleDOI
Understanding the Credit Multiplier: The Working Capital Channel
TL;DR: In this paper, the authors propose and analyze a new mechanism through which financial frictions can affect firms' operations and economic activity: the working capital credit multiplier, and develop an identification strategy that builds on cash flow seasonality and allows them to identify funding frictions in working capital.
References
More filters
Posted ContentDOI
Credit Rationing in Markets with Imperfect Information.
Joseph E. Stiglitz,Andrew Weiss +1 more
TL;DR: In this paper, a model is developed to provide the first theoretical justification for true credit rationing in a loan market, where the amount of the loan and amount of collateral demanded affect the behavior and distribution of borrowers, and interest rates serve as screening devices for evaluating risk.
Journal ArticleDOI
How Much Should We Trust Differences-In-Differences Estimates?
TL;DR: In this article, the authors randomly generate placebo laws in state-level data on female wages from the Current Population Survey and use OLS to compute the DD estimate of its "effect" as well as the standard error of this estimate.
Journal ArticleDOI
Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints?
Steven N. Kaplan,Luigi Zingales +1 more
TL;DR: In this article, the authors investigated the relationship between financing constraints and investment-cash flow sensitivities by analyzing the firms identified by Fazzari, Hubbard, and Petersen as having unusually high investment cash flow sensitivity.
Posted Content
Agency Costs, Net Worth, And Business Fluctuations
Ben S. Bernanke,Mark Gertler +1 more
TL;DR: The authors constructs a simple neoclassical model of intrinsic business cycle dynamics in which borrowers' balance sheet positions play an important role and shows that the agency costs of undertaking physical investments are inversely related to the entrepreneur's/borrower's net worth.
Journal ArticleDOI
Tobin's Marginal q and Average q : A Neoclassical Interpretation
TL;DR: In this paper, the optimal rate of investment as a function of marginal q adjusted for tax parameters is derived from data on average q assuming the actual U.S. tax system concerning corporate tax rate and depreciation allowances.