Collateral shocks and corporate employment

Nuri Ersahin, Rustom M. Irani

Research output: Contribution to journalArticlepeer-review


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 languageEnglish (US)
Pages (from-to)163-187
Number of pages25
JournalReview of Finance
Issue number1
StatePublished - 2020


  • Collateral lending channel
  • Credit constraints
  • Employment
  • Real estate

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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