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Type | Journal Article |
Scope | Discipline-based scholarship |
Title | Collateral Damaged? Priority Structure, Credit Supply, and Firm Performance |
Organization Unit | |
Authors |
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Item Subtype | Original Work |
Refereed | Yes |
Status | Published in final form |
Language |
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Journal Title | Journal of Financial Intermediation |
Publisher | Elsevier |
Geographical Reach | international |
ISSN | 1042-9573 |
Volume | 44 |
Page Range | 100824 |
Date | 2020 |
Abstract Text | A unique legal reform in 2004 in Sweden redistributed liquidation proceeds from banks holding floating liens to unsecured creditors. Using a country-wide panel of all registered firms, we document that the resulting reduction in collateral capacity contracts the amount and maturity of corporate debt and leads firms to slow investment and forego growth. Altering their allocation of assets, firms reduce particularly those assets with a low collateralizable value for banks and also hoard more cash. However, the reform has no impact on corporate capital intensity or efficiency, suggesting that under these newly binding credit constraints firms simply shrink their operations. |
Free access at | Related URL |
Official URL | https://www.sciencedirect.com/science/article/pii/S1042957319300324 |
Related URLs |
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Digital Object Identifier | 10.1016/j.jfi.2019.05.001 |
Other Identification Number | merlin-id:17827 |
PDF File | Download from ZORA |
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