This paper studies (non-)equivalence of collateralized credit and asset sale for information-sensitive assets in over-the-counter markets. A signaling game refined by the undefeated equilibrium endogenizes the choice between pooling and separating offers and addresses the payment puzzle. The...

A q-theoretic model highlights the interaction of cash and valuations in explaining expected returns. Cash policy helps identify variation in valuations, with higher cash indicating a higher valuation. Higher cash also indicates a higher return when controlling for valuations, while controlling...

In a q-theoretic model featuring financing constraints, higher expected returns accrue to firms with lower valuations or higher cash, but valuations and cash are positively related. As a result, purging the relation between returns and valuations of cash results in a stronger value effect while...

The goal of this paper is to show that household-level financial distress (FD) varies greatly, meaning there is unequal exposure to macroeconomic risk, and that FD can increase macroeconomic vulnerability. To do this, we first establish three facts: (i) regions in the U.S. vary significantly in...

We propose and test a new channel that links funding liquidity risk and interest rates in short-term funding markets. Borrowers with high liquidity risk are willing to pay a markup to lock in their funding, independent of risk premiums demanded by lenders. We test the channel using unique...

In many industrialized countries, cash usage at points of sale has been decreasing owing to competition from alternative means of payment such as credit cards. At the same time, cash demand, measured as currency in circulation over GDP, fell only in earlier years but has remained surprisingly...

Firms until recently were effectively constrained to hold liquid assets in non-interest-bearing accounts. As a result, the cost of capital of firms' liquid assets portfolios exceeded the return, especially when the risk-free interest rate was high. The spread between cost and return is the cost...

Our paper provides the first cross-country evidence on the distinct dynamics of tangible and intangible investments during and after the global financial crisis. The pre-crisis rise of intangible-to-tangible capital ratio was reversed outside the U.S. due to a greater decline of intangible...