Essays in corporate finance

This thesis consists of three essays covering topics in empirical corporate finance with an emphasis on banking relationships and its effect on liquidity constraints and business growth. In particular, it investigates the effect of monetary capital and human capital constraints and the role of banking relationships to relax both constraints. The first essay studies how the number of bank relationships affects the liquidity constraints of businesses. The second essay investigates how accounting training can affect the liquidity constraints of entrepreneurs finally the third essay studies the effect of credit insurance as a mechanisms to reduce liquidity constraints. Further details of each essay are included below: In Chapter 1, I empirically explore whether firms have a target for the number of banks from which they borrow, and whether having multiple bank relationships has an impact on firms' liquidity situation. A bank merger in Chile provides a quasi-experiment as it constitutes an exogenous reduction in the number of lenders for firms that were previously borrowing from both merging banks. I find that a significant percentage of firms whose number of bank relationships was reduced by the merger regain their original number of lenders. In particular, firms whose number of bank lending relationships was reduced from 2 to 1 as a result of the merger have a 23% higher probability of adding a new bank lending relationship in the 5 years following the merger compared to similar firms unaffected by the merger.