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Contribution Details
Type | Master's Thesis |
Scope | Discipline-based scholarship |
Title | Collateral channel effect of competition on financial leverage |
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Institution | University of Zurich |
Faculty | Faculty of Business, Economics and Informatics |
Number of Pages | 39 |
Date | 2018 |
Abstract Text | I study the effect of high product market competition on financial leverage through collateral channel assuming that a high number of potential buyers who can redeploy production assets at low costs increases salability of pledged assets. I test four competition measures on the state- and country-level and explore how the magnitude of the effect depends on the relative size of companies in the industry. I find that the collateral channel effect of competition is a strong determinant of the capital structure that gains importance during economic recessions. My results are consistent with findings in prior literature that the quantity of peer firms is related positively to loans' recovery rates and negatively to credit spreads. |
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