The Collateral Channel: How Real Estate Shocks Affect Corporate Investment-Reference-Cited by-同舟云学术

The Collateral Channel: How Real Estate Shocks Affect Corporate Investment

Published:2012-10-01 Issue:6 Volume:102 Page:2381-2409
ISSN:0002-8282
Container-title:American Economic Review
language:en
Short-container-title:American Economic Review

Author:

Chaney Thomas¹,Sraer David²,Thesmar David³

Affiliation:

1. Department of Economics, University of Chicago, 1126 East 59th Street, Chicago, IL 60657.

2. Department of Economics Bendheim Center for Finance, Princeton University, 26 Prospect Avenue, Princeton, NJ 08540.

3. HEC School of Management, 1 rue de la Liberation, 78351 Jouy en Josas cedex, France.

Abstract

What is the impact of real estate prices on corporate investment? In the presence of financing frictions, firms use pledgeable assets as collateral to finance new projects. Through this collateral channel, shocks to the value of real estate can have a large impact on aggregate investment. To compute the sensitivity of investment to collateral value, we use local variations in real estate prices as shocks to the collateral value of firms that own real estate. Over the 1993–2007 period, the representative US corporation invests $0.06 out of each $1 of collateral. (JEL D22, G31, R30)

Publisher

American Economic Association

Subject

Economics and Econometrics

Link

https://pubs.aeaweb.org/doi/pdf/10.1257/aer.102.6.2381

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