We use the SEC Tick Size Pilot Program to show that stock liquidity reduces the cost of bank loans. Treated firms experience a 52 basis point increase in the cost of borrowing during the Tick Size Pilot Program; an effect that reverses when the program ends. We find similar results in a broad...

Firms contract capital expenditure and reduce new debt issuance following the bankruptcy of an industry-peer. The spillover effect is transitory and declines with industrial distance. Industries that are financially constrained, geographically concentrated or competitive are more vulnerable to...