Corporate leverage and the collateral channel

Lars Norden and Stefan van Kampen

Journal of Banking & Finance, 2013, vol. 37, issue 12, 5062-5072

Abstract: We investigate whether and how corporate leverage depends on the structure of corporate assets. Based on a large panel dataset of US firms from 1990 to 2010, we show that property, plant and equipment are important drivers of the collateral channel, while inventories and receivables are less important. The collateral channel is more pronounced for firms that have to rely on banks and trade creditors to raise debt finance, but it has become weaker for these firms after the start of the financial crisis. Our study provides new evidence on the cross-sectional and time-varying importance of the collateral channel for corporate leverage.

Keywords: Debt finance; Bank loans; Collateral; Asset structure; Financial crisis (search for similar items in EconPapers)
JEL-codes: G21 G32 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:37:y:2013:i:12:p:5062-5072

DOI: 10.1016/j.jbankfin.2013.09.001

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