Economics at your fingertips  

Liquidity, Pledgeability, and the Nature of Lending

Douglas Diamond, Yunzhi Hu and Raghuram Rajan

No 28377, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We develop a theory of how corporate lending and financial intermediation change based on the fundamentals of the firm and its environment. We focus on the interaction between the prospective net worth or liquidity of an industry and the firm’s internal governance or pledgeability. Variations in prospective liquidity can induce changes in the nature, covenants, and quantity of loans that are made, the identity of the lender, and the extent to which the lender is leveraged. We offer predictions on how these might vary over the financial cycle.

JEL-codes: G2 G21 G23 G3 G32 G33 (search for similar items in EconPapers)
Date: 2021-01
New Economics Papers: this item is included in nep-cfn, nep-cwa and nep-ore
Note: CF
References: Add references at CitEc
Citations: Track citations by RSS feed

Published as Douglas W. Diamond & Yunzhi Hu & Raghuram G. Rajan, 2021. "Liquidity, pledgeability, and the nature of lending," Journal of Financial Economics, .

Downloads: (external link) (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at Free access is also available to older working papers.

Related works:
Working Paper: Liquidity, Pledgeability, and the Nature of Lending (2021) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This working paper can be ordered from
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().

Page updated 2021-11-16
Handle: RePEc:nbr:nberwo:28377