Creditor Rights, Technology Adoption, and Productivity: Plant-Level Evidence

Nuri Ersahin and Philip Strahan

The Review of Financial Studies, 2020, vol. 33, issue 12, 5784-5820

Abstract: I use U.S. Census microdata to analyze the effect of stronger creditor rights on productivity. Following the adoption of antirecharacterization laws that give lenders greater access to the collateral of firms in financial distress, treated plants’ total factor productivity increases by 2.6%. This effect is concentrated among plants belonging to financially constrained firms. I explore the underlying mechanism and find that treated plants change the composition of their investments and their workforce toward newer capital and skilled labor. My results suggest that stronger creditor rights relax borrowing constraints and help firms adopt more efficient production technologies.

JEL-codes: D24 G32 G33 K22 (search for similar items in EconPapers)
Date: 2020
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