Browsing by Author "Cerqueiro, Geraldo"
Now showing 1 - 4 of 4
Results Per Page
Sort Options
- How does personal bankruptcy law affect startups?Publication . Cerqueiro, Geraldo; Penas, María FabianaWe exploit state-level changes in the amount of personal wealth individuals can protect under Chapter 7 to analyze the effect of debtor protection on the financing structure and performance of a representative panel of U.S. startups. The effect of increasing debtor protection depends on the entrepreneur's level of wealth. Firms owned by mid-wealth entrepreneurs whose assets become fully protected suffer a reduction in credit availability, employment, operating efficiency, and survival rates. We find no such negative effects for low-wealth and high-wealth owners. Our results are consistent with theories that predict that asset protection in bankruptcy leads to a redistribution of credit.
- On-site inspecting zombie lendingPublication . Bonfim, Diana; Cerqueiro, Geraldo; Degryse, Hans; Ongena, Steven R. G.In spite of growing regulatory pressure in most developed economies, “zombie lending” remains a widespread practice by banks. In this paper we exploit a series of large-scale on-site inspections made on the credit portfolios of several Portuguese banks to investigate how these inspections affect banks’ future lending decisions. We find that an inspected bank becomes 20% less likely to refinance zombie firms, immediately spurring their default. Overall, banks seemingly reduce zombie lending because the incentives to hold these loans disappear once they are forced to recognize losses.
- On-site inspecting zombie lendingPublication . Bonfim, Diana; Cerqueiro, Geraldo; Degryse, Hans; Ongena, Steven“Zombie lending” remains a widespread practice by banks around the world. In this paper, we exploit a series of large-scale on-site inspections made on the credit portfolios of several Portuguese banks to investigate how these inspections affect banks’ future lending decisions. We find that an inspected bank becomes 20% less likely to refinance zombie firms, immediately spurring their default. Overall, banks seemingly reduce zombie lending because the incentives to hold these loans disappear once they are forced to recognize losses.
- Political uncertainty and the geographic allocation of credit: evidence from small businessesPublication . Cerqueiro, Geraldo; Mão-de-Ferro, Ana; Penas, María FabianaWe investigate how banks change the geographic distribution of their small business loan portfolio when they face political uncertainty in some of the states where they operate. Using exogenous variation in gubernatorial elections with binding term limits, we show that political uncertainty causes local banks to increase out-of-state lending to small firms, particularly those located in higher-income areas. This effect follows a decrease in local lending and is stronger for banks that are more capital-constrained. The increase in out-of-state credit leads to an increase in employment growth and net firm creation in sectors with larger capital needs.