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Creditor Rights, Technology Adoption, and Productivity: Plant-Level Evidence

April 2018

Written by: Nuri Ersahin

Working Paper Number:

CES-18-20

Abstract

I analyze the impact of stronger creditor rights on productivity using plant-level data from the U.S. Census Bureau. Following the adoption of anti-recharacterization laws that give lenders greater access to the collateral of firms in financial distress, 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 stronger creditor rights relax borrowing constraints and help firms adopt more efficient production technologies.

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financial, finance, investor, leverage, depreciation, patent, lending, loan, bank, bankruptcy, lender, borrowing, economically, debt, liquidation, equity, borrow, bankrupt, debtor, credit, collateral, banking, creditor

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Census of Manufactures, Annual Survey of Manufactures, Bureau of Labor Statistics, Total Factor Productivity, National Bureau of Economic Research, Bureau of Economic Analysis, Federal Reserve Bank, Longitudinal Business Database, Chicago Census Research Data Center, Census of Manufacturing Firms, Employer Identification Numbers, Boston College, Federal Statistical Research Data Center

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