This paper investigates the 2013 three-fold increase in the French dividend tax rate. Using administrative data covering the universe of firms from 2008-2017 and a quasi-experimental setting, we find that firms swiftly cut dividend payments and used this tax-induced increase in liquidity to...

This paper provides novel evidence that reduced financial constraints increase physical capital quality and, consequently, productivity. We use a novel project-level investment dataset from India, CapEx, with data on project cost, capacity added to the firm, and investment’s product category....

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...

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,...

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...