Collateral and the Choice Between Bank Debt and Public Debt

This paper tests how collateral value affects a firm’s choice between bank debt and public debt by considering the exogenous variation in the market value of a firm’s real-estate assets caused by fluctuations in local real-estate prices. Using local land supply elasticities as an instrument for local real-estate prices, I estimate that a one-standard-deviation increase in collateral value causes bank debt as a fraction of total debt to increase by six percentage points. This paper was accepted by Wei Jiang, finance.

• 저널Management Science · 62(1) · 111–127
• 토픽Housing Market and Economics · Economics and Econometrics
• DOI10.1287/mnsc.2014.2094
• 저자Leming Lin