Essays in corporate finance

This thesis consists of three essays covering topics in empirical corporate finance with an emphasis on banking relationships and its effect on liquidity constraints and business growth. In particular, it investigates the effect of monetary capital and human capital constraints and the role of banking relationships to relax both constraints. The first essay studies how the number of bank relationships affects the liquidity constraints of businesses. The second essay investigates how accounting training can affect the liquidity constraints of entrepreneurs finally the third essay studies the effect of credit insurance as a mechanisms to reduce liquidity constraints. Further details of each essay are included below: In Chapter 1, I empirically explore whether firms have a target for the number of banks from which they borrow, and whether having multiple bank relationships has an impact on firms' liquidity situation. A bank merger in Chile provides a quasi-experiment as it constitutes an exogenous reduction in the number of lenders for firms that were previously borrowing from both merging banks. I find that a significant percentage of firms whose number of bank relationships was reduced by the merger regain their original number of lenders. In particular, firms whose number of bank lending relationships was reduced from 2 to 1 as a result of the merger have a 23% higher probability of adding a new bank lending relationship in the 5 years following the merger compared to similar firms unaffected by the merger.

Department dc:contributor.department

Sloan School of Management.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2009

Author dc:creator

• Drexler, Alejandro Herman

Advisor dc:contributor.advisor

• Antoinette Schoar, Roberto Rigobon and Gustavo Manso.

• Sloan School of Management.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/57974

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/57974