We structurally estimate a set of firm- and time-varying measures of the magnitude of external financial constraints. By considering the entire capital structure—equity and debt of various maturities—we identify on which external financing margin(s) a firm is constrained at a given point in...

This paper uses Chinese data to calibrate a monetary policy model, so as to study the special impact of sectoral differences in financing and budget constraints on developing countries' monetary policy. The paper finds that real estate transactions, as a particularly effective monetary policy...

In-group bias and parochialism can be detrimental for communities and economic development. We study the causal effect of financial constraints on in-group bias in prosocial behaviors—cooperation, norm enforcement, and sharing—among low-income rice farmers in rural Thailand, who cultivate...

We document new evidence that low equity in financially under-developed economies is associated with lower productivity investment, a smaller employment share of large firms, and smaller average firm size within sectors. We present a tractable model with heterogeneous entrepreneurs that face...

In recent empirical literature, investment-cash flow (ICF) sensitivity can increase or decrease with the tightness of financing constraints. Earlier critiques suggesting that cash flow reflects expected productivity cannot explain the mixed results. Theories of financing constraints, however,...

We investigate if credit constraints introduce a degree of difference among firms in their mode of importing. First, we develop a simple theoretical framework highlighting the possible links between credit constraints and reliance on import intermediaries, and then use firm-level data from 66...

Recently, central banks around the world have relied mostly on nontraditional policy tools to stimulate economic activity. A distinctive example is the expansion of the size of central bank balance sheets through the purchase of long-term government securities. In this paper we analyze the...

Recently, central banks around the world have relied mostly on nontraditional policy tools to stimulate economic activity. A distinctive example is the expansion of the size of central bank balance sheets through the purchase of long-term government securities. In this paper we analyze the...

This paper provides a novel theory of research joint ventures for financially constrained firms. When firms choose R&D portfolios, an RJV can help to coordinate research efforts, reducing investments in duplicate projects. This can free up resources, increase the variety of pursued projects and...