Objective – This study investigates the effects of financial constraints on the conservatism practices of Brazilian firms.Design/methodology/approach – A sample totaling 1,086 observations of Brazilian publicly traded companies listed on BM&FBovespa was developed from 2000 to 2012. In the...

Parents and students from different socioeconomic backgrounds value differently school characteristics, but the reasons behind this preference heterogeneity are not well understood. In the context of the centralized school assignment system in Mexico City, this study analyzes how a large...

Using account-level credit card data from a major Turkish bank we show the impact of a unique restrictive credit card policy on consumption and debt repayment behavior. The complex policy imposes two types of soft liquidity constraints for certain credit card holders: progressively higher...

Financial constraints are widespread in developing countries, where even short-term credit is limited. Finance held by firms as working capital is a substantial proportion of sales revenue, yet the role of working capital is largely neglected by existing models of financial constraints. This...

Theory suggests that financing frictions can have significant implications for firms' equity volatility by shaping their exposure to economic risks. This paper provides evidence that an important determinant of higher equity volatility among R&D-intensive firms is fewer financing constraints on...

We investigate how financial contracting interacts with lending channel effects by tracing the anatomy of a credit supply shock using micro-level data from a multinational bank. Borrowers with stronger lending relationships, higher non-lending revenues, and those that pledge collateral,...

About 20% of U.S. households are credit constrained. This research analyzes credit constraints among those who have applied for credit and controls for the effects of past credit behavior on being credit constrained. It is the first to identify the impact on being credit constrained of being...

This study investigates if financial constraints reduce investment among private and small firms using a rich, census-based dataset of manufacturing plants from Ethiopia. Impulse responses from a panel VAR estimation are used to compare the response of investment to changes in cash flow and the...

Risk-managed momentum allows investors to increase the Sharpe ratio of the momentum strategy and to reduce momentum crashes. Yet, the improvement in the performance comes at the price of often assuming a levered position on plain momentum. I show that leverage-constrained investors benefit from...

How should monetary policy respond to a global liquidity trap, where the two countries may fall into a liquidity trap simultaneously? Using a two-country New Open Economy Macroeconomics model, we first characterise optimal monetary policy, and show that the optimal rate of inflation in one...