Creditor Rights, Technology Adoption, and Productivity: Plant-Level Evidence
January 2017
Working Paper Number:
CES-17-36
Abstract
I analyze the impact of strengthening of creditor rights on productivity using plant-level data from the U.S. Census Bureau. Following the adoption of anti-recharacterization laws that improve the ability of lenders to access the collateral of the firm, total factor productivity of treated plants increases by 2.6 percent. This effect is mainly observed among plants belonging to financially constrained firms. Furthermore, treated plants invest in capital of younger vintage and newer technology, and become more capital-intensive. My results suggest that strengthening of creditor rights leads to a relaxation in borrowing constraints, and helps firms adopt a more efficient production technology.
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corporation,
financial,
investor,
leverage,
lending,
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bankruptcy,
lender,
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debt,
liquidation,
equity,
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Longitudinal Business Database,
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Employer Identification Numbers
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