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Corporate leverage and the collateral channel

  • Norden, Lars
  • van Kampen, Stefan
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    We investigate whether and how corporate leverage depends on the structure of corporate assets. Based on a large panel dataset of US firms from 1990 to 2010, we show that property, plant and equipment are important drivers of the collateral channel, while inventories and receivables are less important. The collateral channel is more pronounced for firms that have to rely on banks and trade creditors to raise debt finance, but it has become weaker for these firms after the start of the financial crisis. Our study provides new evidence on the cross-sectional and time-varying importance of the collateral channel for corporate leverage.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0378426613003580
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    Article provided by Elsevier in its journal Journal of Banking & Finance.

    Volume (Year): 37 (2013)
    Issue (Month): 12 ()
    Pages: 5062-5072

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    Handle: RePEc:eee:jbfina:v:37:y:2013:i:12:p:5062-5072
    Contact details of provider: Web page: http://www.elsevier.com/locate/jbf

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