Much of the existing literature on the relationship between trade credit and loans focuses solely on how a reduction in loans affects the use of trade credit. In this paper, we additionally investigate if a reduction in trade credit is offset by an increase in loans. Using a unique firm-level...

We empirically examine whether greater firm diversity results in the inefficient allocation of capital. Using both COMPUSTAT and the Annual Capital Expenditure Survey (ACES) we find firm diversity to be negatively related to the efficiency of investment. However once we distinguish between...

In this study, we specify a disaggregated vector autoregression model (VAR) to analyze the behavior of employment in three Southern California counties during two different types of aggregate economic downturns. Using this model, we estimate the impact of hypothetical, one-time shocks to...

This Paper compares the responses of bank loan components to a monetary tightening with the responses to negative output shocks. Real estate and consumer loans sharply decrease during a monetary tightening but not after a negative output shock. In contrast, C&I loans (and commercial paper)...

We empirically examine whether greater firm diversity results in the inefficient allocation of capital. Using both COMPUSTAT and the Annual Capital Expenditure Survey (ACES) we find firm diversity to be negatively related to the efficiency of investment. However once we distinguish between...

A robust finding for both small and large banks is that in response to a monetary tightening, real estate and consumer loans decrease while C&I loans increase. We also show that in a standard log-linear VAR the impulse response function of an aggregate variable is time varying. The finding that...

Using a unique and massive data set that contains information on interfirm transaction relationships, we examine default propagation along the trade credit channel and for the first time provide direct and systematic evidence of its existence and relevance. Not only do we implement simulations...

In this paper, we investigate whether a natural selection works for firm exit after a massive natural disaster. By using a unique data set of more than 84,000 firms after the Great Tohoku Earthquake, we examine the impact of firm efficiency on firm bankruptcy both inside and outside the...

A firm’s choice of location is very important because it reveals the firm’s dynamics. Using a unique firm-level data set, we examine whether and how the presence of incumbent transaction partners (i.e., suppliers, customers, and lender banks) affects this choice. To this end, we focus on...

In this paper, we investigate whether a natural selection mechanism works for firm exit. By using data of firms after a devastating earthquake, the Greeat Tohoku Earthquake, we examine the impact of firm efficiency on firm exit both inside and outside the earthquake-affected areas. We find...