Catholic University of Chile
School of Management
Avenida Vicuña Mackenna 4860
Institutional Affiliation: Catholic University of Chile
Information about this author at RePEc
NBER Working Papers and Publications
|June 2019||Search for Yield in Large International Corporate Bonds: Investor Behavior and Firm Responses|
with Charles W. Calomiris, Sergio L. Schmukler, Tomas Williams: w25979
Emerging market corporations have significantly increased their borrowing in international markets since 2008. We show that this increase was driven by large-denomination bond issuances, most of them with face value of exactly US$500 million. Large issuances are eligible for inclusion in important international market indexes. These bonds appeal to institutional investors because they are more liquid and facilitate targeting market benchmarks. We find that the rewards of issuing index-eligible bonds rose drastically after 2008. Emerging market firms were able to cut their cost of funds by roughly 100 basis points by issuing bonds with a face value equal to or greater than US$500 million relative to smaller bonds. Firms contemplating whether to take advantage of this cost saving face a trad...
|March 2018||Capital Inflows, Equity Issuance Activity, and Corporate Investment|
with Charles W. Calomiris, Sergio L. Schmukler: w24433
We use issuance-level data to study how equity capital inflows that enter emerging market economies affect equity issuance and corporate investment. We show that foreign inflows are strongly correlated with country-level issuance. The relation reflects the behavior of large issuers issuing in domestic equity markets and that of firms issuing in international markets. Those larger, more liquid, and highly valued firms are the ones more likely to raise equity when their country receives capital inflows. To identify supply-side shocks, we instrument capital inflows into each country with exogenous changes in other countries’ attractiveness to foreign investors. Shifts in the supply of foreign capital are important drivers of increased equity inflows. Instrumented inflows lead a subset of firm...
|January 2016||How Collateral Laws Shape Lending and Sectoral Activity|
with Charles W. Calomiris, José M. Liberti, Jason D. Sturgess: w21911
We demonstrate the central importance of creditors’ ability to use “movable” assets as collateral (as distinct from “immovable” real estate) when borrowing from banks. Using a unique cross-country micro-level loan dataset containing loan-to-value ratios for different assets, we find that loan-to-values of loans collateralized with movable assets are lower in countries with weak collateral laws, relative to immovable assets, and that lending is biased towards the use of immovable assets. Using sector-level data, we find that weak movable collateral laws create distortions in the allocation of resources that favor immovable-based production. An analysis of Slovakia’s collateral law reform confirms our findings.
Published: Calomiris, Charles W. & Larrain, Mauricio & Liberti, José & Sturgess, Jason, 2017. "How collateral laws shape lending and sectoral activity," Journal of Financial Economics, Elsevier, vol. 123(1), pages 163-188. citation courtesy of
|October 2015||Enlarging the Contracting Space: Collateral Menus, Access to Credit, and Economic Activity|
with Murillo Campello: w21690
Recent reforms across Eastern European countries gave more flexibility and information for parties to engage in secured debt transactions. The menu of assets legally accepted as collateral was enlarged to include movable assets (e.g., machinery and equipment). Generalized difference-in-differences tests show that firms operating more movable assets borrowed more as a result of such reforms. Those firms also invested more, hired more, and became more efficient and profitable following the changes in the contracting environment. The financial deepening we document triggered important reallocation effects: Firms affected by the reforms increased their share of fixed assets and employment in the economy.
Published: Murillo Campello & Mauricio Larrain, 2016. "Enlarging the Contracting Space: Collateral Menus, Access to Credit, and Economic Activity," Review of Financial Studies, vol 29(2), pages 349-383.