Papers Containing Keywords(s): 'creditor'
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Authors
Nuri Ersahin - 5
Rustom M. Irani - 3
Viewing papers 1 through 10 of 14
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Working PaperEviction and Poverty in American Cities
July 2023
Working Paper Number:
CES-23-37
More than two million U.S. households have an eviction case filed against them each year. Policymakers at the federal, state, and local levels are increasingly pursuing policies to reduce the number of evictions, citing harm to tenants and high public expenditures related to homelessness. We study the consequences of eviction for tenants using newly linked administrative data from two major urban areas: Cook County (which includes Chicago) and New York City. We document that prior to housing court, tenants experience declines in earnings and employment and increases in financial distress and hospital visits. These pre-trends pose a challenge for disentangling correlation and causation. To address this problem, we use an instrumental variables approach based on cases randomly assigned to judges of varying leniency. We find that an eviction order increases homelessness and hospital visits and reduces earnings, durable goods consumption, and access to credit in the first two years. Effects on housing and labor market outcomes are driven by impacts for female and Black tenants. In the longer-run, eviction increases indebtedness and reduces credit scores.View Full Paper PDF
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Working PaperAccess to Financing and Racial Pay Gap Inside Firms
July 2023
Working Paper Number:
CES-23-36
How does access to financing influence racial pay inequality inside firms? We answer this question using the employer-employee matched data administered by the U.S. Census Bureau and detailed resume data recording workers' career trajectories. Exploiting exogenous shocks to firms' debt capacity, we find that better access to debt financing significantly narrows the earnings gap between minority and white workers. Minority workers experience a persistent increase in earnings and also a rise in the pay rank relative to white workers in the same firm. The effect is more pronounced among mid- and high-skill minority workers, in areas where white workers are in shorter supply, and for firms with ex-ante less diverse boards and greater pre-existing racial inequality. With better access to financing, minority workers are also more likely to be promoted or be reassigned to technology-oriented occupations compared to white workers. Our evidence is consistent with access to financing making firms better utilize minority workers' human capital.View Full Paper PDF
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Working PaperHow Collateral Affects Small Business Lending: The Role of Lender Specialization
August 2021
Working Paper Number:
CES-21-22
I study the role of collateral on small business credit access in the aftermath of the 2008 financial crisis. I construct a novel, loan-level dataset covering all collateralized small business lending in Texas from 2002-2016 and link it to the U.S. Census of Establishments. Using textual analysis, I show that post-2008, lenders reduced credit supply to borrowers outside of the lender's collateral specialization. This result holds when comparing lending to the same borrower from different lenders, and when comparing lending by the same lender to different borrowers. A one standard deviation higher specialization in collateral increases lending to the same firm by 3.7%. Abstracting from general equilibrium effects, if firms switched to lenders with the highest specialization in their collateral, aggregate lending would increase by 14.8%. Furthermore, firms borrowing from lenders with greater specialization in the borrower's collateral see a larger growth in employment after 2008. Finally, I show that firms with collateral more frequently accepted by lenders in the economy find it easier to switch lenders. In sum, my paper shows that borrowing from specialized lenders increases access to credit and employment during a financial crisis.View Full Paper PDF
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Working PaperCreditor Rights, Technology Adoption, and Productivity: Plant-Level Evidence
April 2018
Working Paper Number:
CES-18-20
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.View Full Paper PDF
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Working PaperSocial Influence and the Consumer Bankruptcy Decision
January 2017
Working Paper Number:
CES-17-60
I examine the influence of neighbors on the consumer bankruptcy decision using administrative bankruptcy records linked the 2000 Decennial Census. Two empirical strategies remove unobserved common factors that affect identification. The first strategy uses small geographical areas to isolate neighborhood effects, and the second strategy identifies the effect using past bankruptcy filers who moved states. The findings from both strategies reinforce each other and confirm the role of social influence on the bankruptcy decision. Having a past bankruptcy filer move into the block from a different state increases the likelihood of filing by 10 percent.View Full Paper PDF
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Working PaperWho Files for Personal Bankruptcy in the United States?
January 2017
Working Paper Number:
CES-17-54
Who files for bankruptcy in the United States is not well understood. Previous research relied on small samples from national surveys or a small number of states from administrative records. I use over 10 million administrative bankruptcy records linked to the 2000 Decennial Census and the 2001-2009 American Community Surveys to understand who files for personal bankruptcy. Bankruptcy filers are middle income, more likely to be divorced, more likely to be black, more likely to have terminal high school degree or some college, and more likely to be middle-aged. Bankruptcy filers are more likely to be employed than the U.S. as a whole, and they are more likely to be employed 50-52 weeks. The bankruptcy population is aging faster than the U.S. population as a whole. Lastly, using the pseudo-panels I study what happens in the years around bankruptcy. Individuals are likely to get divorced in the years before bankruptcy and then remarry. Income falls before bankruptcy and then rises after bankruptcy.View Full Paper PDF
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Working PaperPersonal Bankruptcy Law and Entrepreneurship
January 2017
Working Paper Number:
CES-17-42R
We study the effect of debtor protection on firm entry and exit dynamics. We find that more lenient personal bankruptcy laws lead to higher firm entry, especially in sectors with low entry barriers. We also find that debtor protection increases firm exit rates and that this effect is independent of firm age. Our results overall indicate that changes in debtor protection affect firm dynamics.View Full Paper PDF
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Working PaperCreditor Rights, Technology Adoption, and Productivity: Plant-Level Evidence
January 2017
Working Paper Number:
CES-17-36
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.View Full Paper PDF
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Working PaperBankruptcy Spillovers
January 2017
Working Paper Number:
CES-17-16
How do different bankruptcy approaches affect the local economy? Using U.S. Census microdata at the establishment level, we explore the spillover effects of reorganization and liquidation on geographically proximate firms. We exploit the random assignment of bankruptcy judges as a source of exogenous variation in the probability of liquidation. We find that within a five year period, employment declines substantially in the immediate neighborhood of the liquidated establishments, relative to reorganized establishments. Most of the decline is due to lower growth of existing establishments and, to a lesser extent, reduced entry into the area. The spillover effects are highly localized and concentrate in the non-tradable and service sectors, particularly when the bankrupt firm operates in the same sector. These results suggest that liquidation leads to a reduction in consumer traffic to the local area and to a decline in knowledge spillovers between firms. The evidence is inconsistent with the notion that liquidation leads to creative destruction, as the removal of bankrupt businesses does not lead to increased entry nor the revitalization of the area.View Full Paper PDF
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Working PaperAsset Allocation in Bankruptcy
February 2016
Working Paper Number:
CES-16-13
This paper investigates the consequences of liquidation and reorganization on the allocation and subsequent utilization of assets in bankruptcy. We identify 129,000 bankrupt establishments and construct a novel dataset that tracks the occupancy, employment and wages paid at real estate assets over time. Using the random assignment of judges to bankruptcy cases as a natural experiment that forces some firms into liquidation, we find that even after accounting for reallocation, the long-run utilization of assets of liquidated firms is lower relative to assets of reorganized firms. These effects are concentrated in thin markets with few potential users, in areas with low access to finance, and in areas with low economic growth. The results highlight that different bankruptcy approaches affect asset allocation and utilization particularly when search frictions and financial frictions are present.View Full Paper PDF
