nep-cfn New Economics Papers
on Corporate Finance
Issue of 2020‒03‒23
four papers chosen by
Zelia Serrasqueiro
Universidade da Beira Interior

  1. Capital Flows, Real Estate, and Local Cycles: Evidence from German Cities, Banks, and Firms By Peter Bednarek; Daniel Marcel te Kaat; Chang Ma; Alessandro Rebucci
  2. Do Financial Constraints Affect the Composition of Workers in a Firm? By Breunig, Robert; Hourani, Diana; Bakhtiari, Sasan; Magnani, Elisabetta
  3. Financing nascent industry : Leverage, politics, and performance in Imperial Russia By Gregg, Amanda; Nafziger, Steven
  4. Credit, banking fragility and economic performance By Jérôme Creel; Paul Hubert; Fabien Labondance

  1. By: Peter Bednarek; Daniel Marcel te Kaat; Chang Ma; Alessandro Rebucci
    Abstract: We study how an aggregate bank flow shock impacts German cities' GDP growth depending on the state of their local real estate markets. Identification exploits a policy framework assigning refugees to cities on a quasi-random basis and variation in non-developable area for the construction of a measure of exposure to local real estate market tightness. We estimate that the German cities most exposed to real estate market pressure grew 2.5-5.0 percentage points more than the least exposed ones, cumulatively, during the 2009-2014 period. Bank flow shocks shift credit to firms with more collateral. More collateral also leads firms to hire and invest more in response to these shocks.
    JEL: D22 D53 E22 E3 E44 F3 G01 G15 G21 R3
    Date: 2020–03
  2. By: Breunig, Robert (Australian National University); Hourani, Diana (Australian National University); Bakhtiari, Sasan (Department of Industry, Innovation and Science Australia); Magnani, Elisabetta (Macquarie University, Sydney)
    Abstract: We study the relationship between financing constraints and the work- force composition of firms that employ both casual and non-casual workers. We use data on Australian firms from 2009-2014 and a more direct measure of firm financial constraint than previous studies. We show that the proportion of casual workers in firms grew over the time period being analysed. This was the case regardless of whether a firm was financially constrained or not. However, the magnitude of this change differed between financially constrained and unconstrained firms. We find that of firms whose workforces were growing, financially constrained firms hired relatively fewer casual workers than financially unconstrained firms did. This is consistent with firms using internal financing to cope with a lack of access to credit and equity.
    Keywords: financial constraints, firm behaviour, employment patterns, casual work, Australia
    JEL: D22 L23 J29 J49
    Date: 2020–02
  3. By: Gregg, Amanda; Nafziger, Steven
    Abstract: This paper explores the dynamics of corporate finance during the early stages of industrial growth by examining a newly constructed panel database of Imperial Russian industrial corporations’ balance sheets. We document large differences in financial strategies and outcomes across industries, over time, over firms’ life cycles, and between two Russian corporation types. Russian corporations’ profits and dividend payouts followed the Russian business cycle. Russian corporate debt ratios mostly follow modern capital structure theories, but tangible assets were not associated with higher debt levels, suggesting that Russian corporate debt was short-term, that collateral was irrelevant, or that agency problems dominated. We also find evidence that investors needed to be compensated for poor protections, since dividends were valued and widely-held corporations enjoyed greater returns. While the evidence suggests the presence of these and other frictions, our findings are consistent with the Imperial Russian financial system functioning well enough to enable early industrial development.
    JEL: N23 N63 G32
    Date: 2020–03–08
  4. By: Jérôme Creel (Sciences Po-OFCE, ESCP Europe); Paul Hubert (Sciences Po-OFCE); Fabien Labondance (Université de Bourgogne Franche-Comté - CRESE - Sciences Po-OFCE)
    Abstract: Drawing on European Union data, this paper investigates the hypothesis that private credit and banking sector fragility may affect economic growth. We capture banking sector fragility both with the ratio of bank capital to assets and non-performing loans. We assess the effect of these three variables on the growth rate of GDP per capita, using the Solow growth model as a guiding framework. We observe that credit has no effect on economic performance in the EU when banking fragilities are high. However, the potential fragility of the banking sector measured by the non- performing loans decreases GDP per capita.
    Keywords: Private credit, Capital to assets ratio, Non-performing loans
    JEL: G10 G21 O40
    Date: 2020–01

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