Strengthening secured creditors: Implications on debt financing and investment

Óscar J. Guevara and Julio Riutort

Journal of Corporate Finance, 2024, vol. 84, issue C

Abstract: This paper investigates the effects of a comprehensive insolvency regulation reform in Colombia, focusing on strengthening secured creditor rights, expanding the collateral menu, and establishing a national collateral registry. Leveraging a difference-in-difference design, the study examines the impact on firms with varying levels of movable assets. The reform significantly increased debt usage for firms with high movable assets, indicating a positive effect on financing. The national collateral registry played a pivotal role, benefiting firms in less financially developed regions. Furthermore, the analysis reveals nuanced interactions between the reform, firm size, and movable assets, suggesting differential effects on large and small enterprises. The study extends the Law and Finance literature, offering firm-level insights into the intricate dynamics between institutional changes and access to debt financing.

Keywords: Creditor rights; Bankruptcy reform; Secured creditors; Collateral; Movable assets (search for similar items in EconPapers)
JEL-codes: G33 G38 K22 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:84:y:2024:i:c:s0929119923001864

DOI: 10.1016/j.jcorpfin.2023.102537

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