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House prices, collateral, and self-employment

Listed author(s):
  • Adelino, Manuel
  • Schoar, Antoinette
  • Severino, Felipe

We show the importance of the collateral lending channel for small business employment over the past decade. Small businesses in areas with greater increases in house prices experienced stronger growth in employment than large firms in the same areas and industries. To identify the role of the collateral lending channel separately from aggregate changes in demand, we show that this effect is more pronounced in industries that need little start-up capital and in which housing collateral is more important. This increase is also present in manufacturing industries, particularly those that ship goods over long distances. In aggregate, the collateral lending channel explains 15–25% of employment variation.

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File URL: http://www.sciencedirect.com/science/article/pii/S0304405X1500029X
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Article provided by Elsevier in its journal Journal of Financial Economics.

Volume (Year): 117 (2015)
Issue (Month): 2 ()
Pages: 288-306

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Handle: RePEc:eee:jfinec:v:117:y:2015:i:2:p:288-306
DOI: 10.1016/j.jfineco.2015.03.005
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505576

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