IDEAS home Printed from https://ideas.repec.org/a/oup/revfin/v24y2020i1p163-187..html
   My bibliography  Save this article

Collateral Shocks and Corporate Employment
[House prices, collateral, and self-employment]

Author

Listed:
  • Nuri Ersahin
  • Rustom M Irani

Abstract

We analyze how firm-level shocks to collateral values influence employment outcomes among US corporations. Using comprehensive employment data from the US Census Bureau, we estimate that employment expenditures increase by $0.10 per $1 increase in firms’ real estate collateral values. These effects are stronger among financially constrained firms, and additional hiring is funded through debt issuance, consistent with a collateral channel. This relation holds among firms in tradable goods sectors, alleviating concerns about local demand shocks. Thus, through a collateral lending channel, fluctuations in the US commercial real estate market are an important driver of corporate labor demand.

Suggested Citation

  • Nuri Ersahin & Rustom M Irani, 2020. "Collateral Shocks and Corporate Employment [House prices, collateral, and self-employment]," Review of Finance, European Finance Association, vol. 24(1), pages 163-187.
  • Handle: RePEc:oup:revfin:v:24:y:2020:i:1:p:163-187.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/rof/rfy036
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chen, Xiaoxiong & He, Feng & Liu, Guanchun & Ye, Yongwei, 2022. "The effect of downstream expansion on upstream employment: Quasi-natural experimental evidence from China’s Accelerated Depreciation Policy," Research in International Business and Finance, Elsevier, vol. 63(C).
    2. Ding, Haoyuan & Ni, Bei & Xue, Chang & Zhang, Xiaoyu, 2022. "Land holdings and outward foreign direct investment: Evidence from China," Journal of International Money and Finance, Elsevier, vol. 124(C).
    3. Liu, Guanchun & Liu, Yuanyuan & Ye, Yongwei & Zhang, Chengsi, 2021. "Collateral menus and corporate employment: Evidence from China's Property Law," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 686-709.
    4. Liao, Tianlong & Liu, Guanchun & Liu, Yuanyuan & Lu, Rui, 2023. "Environmental regulation and corporate employment revisited: New quasi-natural experimental evidence from China's new environmental protection law," Energy Economics, Elsevier, vol. 124(C).
    5. Luo, Yonggen & Wang, Deli & Hu, Shiyang, 2024. "Patent collateral and the trajectory of innovation," Pacific-Basin Finance Journal, Elsevier, vol. 84(C).
    6. Li, Tongxia & Lu, Chun & Chen, Zhihua, 2023. "The unintended consequence of collateral-based financing: Evidence from corporate cost behavior," Journal of Contemporary Accounting and Economics, Elsevier, vol. 19(1).
    7. Liu, Guanchun & Liu, Yuanyuan & Zhang, Chengsi, 2022. "Tax enforcement and corporate employment: Evidence from a quasi-natural experiment in China," China Economic Review, Elsevier, vol. 73(C).

    More about this item

    Keywords

    Credit constraints; Collateral lending channel; Employment; Real estate;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:revfin:v:24:y:2020:i:1:p:163-187.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/eufaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.