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We investigate how firms manage financial default risk (on debt) and operational default risk (on delivery obligations). Financially constrained firms reduce operational hedging through inventory and supply chain in favor of cash holdings. Our model predicts that firms' markup increases with...
Persistent link: https://www.econbiz.de/10015194985
have a higher ratio of cash reserves to lines of credit, controlling for other determinants of liquidity policy. This …
Persistent link: https://www.econbiz.de/10003983591
Persistent link: https://www.econbiz.de/10009526530
The U.S. bank stress tests aim to improve financial system stability. However, they may also affect bank credit supply. We formulate and test opposing hypotheses about these effects. Our findings are consistent with the Risk Management Hypothesis, under which stress-tested banks reduce credit...
Persistent link: https://www.econbiz.de/10012955765
Persistent link: https://www.econbiz.de/10014443128
How do firms mitigate the impact of rising temperatures on employment? Using establishment-level data, we show that firms operating in multiple counties in the United States respond to heat shocks by reducing employment in the affected locations and increasing it in unaffected locations, whereas...
Persistent link: https://www.econbiz.de/10014447288