Enlarging the Contracting Space: Collateral Menus, Access to Credit, and Economic Activity / Murillo Campello, Mauricio Larrain.

Format:

Book

Author/Creator:

Campello, Murillo.

Contributor:

National Bureau of Economic Research.

Larrain, Mauricio.

Series:

Working Paper Series (National Bureau of Economic Research) no. w21690.

NBER working paper series no. w21690

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Enlarging the Contracting Space

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2015.

Summary:

Recent reforms across Eastern European countries gave more flexibility and information for parties to engage in secured debt transactions. The menu of assets legally accepted as collateral was enlarged to include movable assets (e.g., machinery and equipment). Generalized difference-in-differences tests show that firms operating more movable assets borrowed more as a result of such reforms. Those firms also invested more, hired more, and became more efficient and profitable following the changes in the contracting environment. The financial deepening we document triggered important reallocation effects: Firms affected by the reforms increased their share of fixed assets and employment in the economy.

Notes:

Print version record

October 2015.