201. The Collateral Channel and Bank Credit.
- Author
-
Gupta, Arun, Sapriza, Horacio, and Yankov, Vladimir
- Subjects
BANK loans ,COLLATERAL security ,HOME prices ,BUSINESS cycles ,COMMERCIAL real estate loans ,UNEMPLOYMENT statistics - Abstract
Among our findings: * Small firms tend to pledge real estate collateral,medium-sized firms tend to pledge accounts receivablesand blanket liens, and large firms tend raise unsecuredfinancing. Economic Brief We identify the firm-level and aggregate effects ofcollateral price shocks on business lending andinvestment -- also known as the collateral channel-- using detailed bank-firm-loan level data that allow usto observe the pledging of real estate collateral and tocontrol for credit demand and supply conditions. Results We identify the firm-level effects of the collateralchannel conditioning on firm-level demand factors andbank-level supply conditions using detailedbank-firm-loan level data. Instead, most large firms use debt contractsthat are unsecured or based on earnings-based collateral,whose recovery value depends on the continuation value ofthe firm rather than specific assets. [Extracted from the article]
- Published
- 2023