Enlarging the Contracting Space: Collateral Menus, Access to Credit, and Economic Activity

Murillo Campello and Mauricio Larrain

No 21690, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Recent reforms across Eastern European countries gave more flexibility and information for parties to engage in secured debt transactions. The menu of assets legally accepted as collateral was enlarged to include movable assets (e.g., machinery and equipment). Generalized difference-in-differences tests show that firms operating more movable assets borrowed more as a result of such reforms. Those firms also invested more, hired more, and became more efficient and profitable following the changes in the contracting environment. The financial deepening we document triggered important reallocation effects: Firms affected by the reforms increased their share of fixed assets and employment in the economy.

JEL-codes: G32 K22 O16 (search for similar items in EconPapers)
Date: 2015-10
Note: CF DEV IFM LE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

Published as Murillo Campello & Mauricio Larrain, 2016. "Enlarging the Contracting Space: Collateral Menus, Access to Credit, and Economic Activity," Review of Financial Studies, vol 29(2), pages 349-383.

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Journal Article: Enlarging the Contracting Space: Collateral Menus, Access to Credit, and Economic Activity (2016)
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