Collateral and the choice between bank debt and public debt

• Autores: Leming Lin
• Localización: Management science: journal of the Institute for operations research and the management sciences, ISSN 0025-1909, Vol. 62, Nº. 1, 2016, págs. 111-127
• Idioma: inglés
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• Resumen

  • 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.