Bank market power shapes firm investment and financing dynamics and hence affects the transmission of macroeconomic shocks. Motivated by a secular increase in the concentration of the US banking industry, I study bank market power through the lens of a dynamic general equilibrium model with...

Programs to direct finance to small firms are ubiquitous. We develop evidence of unexpected side-effects of these programs. Exploiting discontinuities in program eligibility in India’s PSL program, we show that targeted lending programs can slow growth, paradoxically creating financial...

We acquired firm-level data from 27 post-communist economies in Eastern Europe and Central Asia during 2002–08, and we estimated financial constraints’ longitudinal impacts on firms’ innovating activities. Overall, we found financial constraints to significantly impede firms’ innovation...

We characterize efficiency in an equilibrium model of investment and capital reallocation with heterogeneous firms facing collateral constraints. The model features two types of pecuniary externalities: collateral externalities, because the resale price of capital affects collateral constraints,...

Although a credit tightening is commonly recognized as a key determinant of the Great Recession, to date, it is unclear whether a worsening of credit conditions faced by households or by firms was most responsible for the downturn. Some studies have suggested that the household-side credit...

We highlight the role of financial constraints in contributing to persistent disparities in wealth and access to geographic opportunities across demographic groups. We document a racial leverage gap—Black borrowers have substantially higher LTV ratios at mortgage origination, reflecting...

Using a borrower firm’s relationship bank becoming a member of the Task Force on Climate-Related Financial Disclosures (TCFD) and thus committing to more transparent climate-related disclosures as a plausible exogeneous shock, we examine whether and how lenders’ commitment to climate-related...