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Financial constraints, collateral prices, and corporate investment: evidence from Brazil
| Content Provider | Semantic Scholar |
|---|---|
| Author | Bampi, Rodrigo Eduardo Colombo, Jéfferson Augusto |
| Copyright Year | 2017 |
| Abstract | Corporate finance theory points out collateral as a contract instrument that reduces asymmetric information problems and increases value for debtors in default states. During credit expansions, high collateral prices could increase borrowing capacity of firms, especially for those that were financially constrained before the boom period. In this paper, we exploit a real estate prices boom during the 2000s in Brazil to study the role of collateral on corporate financing and investment. Our results suggest that the credit boom of the second half of the 2000s alleviated financial constraints in Brazil, especially for small, less tangible publicly traded firms, ending up to increase corporate investment (weak evidence) and long term debt financing (strong evidence). |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | https://www.anpec.org.br/encontro/2017/submissao/files_I/i8-1fe3b0b3b01ec9e6e1a479c40c703551.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
