Collateral shocks and corporate employment

Nuri Ersahin; Rustom M. Irani

doi:10.1093/rof/rfy036

Collateral shocks and corporate employment

Research output: Contribution to journal › Article › peer-review

Abstract

We analyze how firm-level shocks to collateral values influence employment outcomes among US corporations. Using comprehensive employment data from the US Census Bureau, we estimate that employment expenditures increase by $0.10 per $1 increase in firms' real estate collateral values. These effects are stronger among financially constrained firms, and additional hiring is funded through debt issuance, consistent with a collateral channel. This relation holds among firms in tradable goods sectors, alleviating concerns about local demand shocks. Thus, through a collateral lending channel, fluctuations in the US commercial real estate market are an important driver of corporate labor demand.

Original language	English (US)
Pages (from-to)	163-187
Number of pages	25
Journal	Review of Finance
Volume	24
Issue number	1
DOIs	https://doi.org/10.1093/rof/rfy036
State	Published - 2020

Keywords

Collateral lending channel
Credit constraints
Employment
Real estate

ASJC Scopus subject areas

Accounting
Finance
Economics and Econometrics

Online availability

10.1093/rof/rfy036

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Collateral shocks and corporate employment

Abstract

Keywords

ASJC Scopus subject areas

Online availability

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