Lament (1997) claims to find evidence of credit market imperfections that distort financing and investment decisions of a sample of oil-dependent firms, as investment by nonoil units fell when oil cash flow dropped. However, a simple test reveals that few of these firms behaved in a fashion...

Cash holdings of nonfinancial firms range widely, and are related to firm size, industry and access to the public bond market. Cash holdings are positively correlated with agency proxies, suggesting that firms that cannot borrow easily due to agency problems hold greater cash stocks--perhaps as...

This paper models a firm's issuance of commercial paper (CP) as a strategy to lower its borrowing costs by taking advantage of a quot;clientele effectquot; in the demand for safe assets. The firm is willing to expose itself to liquidity risk in order to enjoy the savings on borrowing costs. A...

Why are housing markets so prone to boom-bust cycles? The mortgage market structureprior to the Savings and Loan crisis contributed to the volatility in real housing activity which, in turn, amplified the volatility in housing prices. The subsequent development of a national, market-based system...