Using micro-level data for the U.S., we provide new evidence-at national and state levels - of a positive (negative) relationship between the standard deviation (coefficient of variation) and the average in bank lending-rate markups. In a quantitative theory consistent with these empirical...

Using micro-level data for the U.S., we provide new evidence-at national and state levels - of a positive (negative) relationship between the standard deviation (coefficient of variation) and the average in bank lending-rate markups. In a quantitative theory consistent with these empirical...

Pre-packaged reorganization (prepack) takes ex ante better firms through a shorter and less costly bankruptcy procedure compared to traditional Chapter 11 but leads to more refiling. To explain this phenomenon, we propose an information acquisition model where creditors trade higher bankruptcy...

We examine the effectiveness of bank regulation in the light of creditor diversity. Our theory suggests a bank can increase its value by matching the riskiness of its securities and the risk tolerance of its diverse creditors. Even a well-capitalized bank might not eliminate financial fragility...

Collateral is often viewed as a low-cost mechanism to mitigate external financing frictions. However, we find that firms face a substantial cost to pledge collateral. Exploiting a regulatory quirk of the disaster loan program of the Small Business Administration (SBA), we estimate that the cost...