We document the fact that at both the aggregate and the firm level, corporations tend to simultaneously raise external finance and accumulate liquid assets. For all but the very largest firms, the aggregate correlation between external finance raised and liquidity accumulation is 0.6, and the...

We use firms' decisions in the cross-section about their sources and uses of funds in order to make inferences about the aggregate cost of external finance. The basic intuition is as follows: Firms which raise costly external finance can invest the issuance proceeds in productive capital assets,...

We document that average stock returns can be largely explained by their covariance with shocks to the aggregate leverage of security broker-dealers. Our single-factor leverage model compares favorably with standard multi-factor models in the cross-section of size and book-to-market portfolios...

type="main" <title type="main">ABSTRACT</title> <p>Financial intermediaries trade frequently in many markets using sophisticated models. Their marginal value of wealth should therefore provide a more informative stochastic discount factor (SDF) than that of a representative consumer. Guided by theory, we use shocks to the...</p>

This paper develops a search and matching model of an over-the-counter market for credit derivatives. In equilibrium, the large volume of bilateral trade creates a network of credit exposures in which banks are linked together by a complex liability structure, with gross credit exposures that...

This paper studies the unique risk characteristics of organization capital. Using a stock measure of organization capital based on readily available accounting data, we find that firms with more organization capital relative to their industry peers outperform firms with less organization capital...

This paper studies the effects of the joint distribution of the stock financial expertise and financial wealth on asset prices. By modeling financial expertise as a stock, we are able to incorporate economic ideas from capital theory as well as industrial organization into a model with slow...

In the wake of the 2008 housing bust, Single Family Rental (SFR) strategies have become popular investment vehicles for private equity funds and hedge funds. Industry estimates place the number of homes purchased by SFR investors from 2011-2013 at over 350,000, which is about 10% of all...

This paper studies the choice between investment in new and used capital. We argue that used capital inherently relaxes credit constraints and thus firms which are more credit constrained invest more in used capital. Used capital is cheap relative to new capital in terms of its purchase price...

This paper studies the financing role of leasing and secured lending. We argue that the benefit of leasing is that repossession of a leased asset is easier than foreclosure on the collateral of a secured loan, which implies that leasing has higher debt capacity than secured lending. However,...