Acharya, Viral V.; Campello, Murillo; Almeida, Heitor - National Bureau of Economic Research (NBER) - 2010
We argue that a firm's aggregate risk is a key determinant of whether it manages its future liquidity needs through cash reserves or bank lines of credit. Banks create liquidity for firms by pooling their idiosyncratic risks. As a result, firms with high aggregate risk find it costly to get...