Review of Finance Vol. 24 No. 1 2020
Collateral Shocks and Corporate Employment
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.
- DOI
- 10.1093/rof/rfy036
- Volume
- 24
- Issue
- 1
- Pages
- 163-187
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref