Borrowing constraints, financial frictions, misallocation and GDP per worker

The aim of this paper is to analyze the effect of relaxing borrowing constraints taking into account that firms may be facing either earnings-based or asset-based borrowing constraints on some aggregates such GDP per worker or TFP. We also analyze the impact on those aggregates of increasing the pro...

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Detalles Bibliográficos
Autores: Iza Padilla, María Amaya, Ostolozaga Falcón, Ibai
Tipo de recurso: artículo
Fecha de publicación:2025
País:España
Institución:Universidad del País Vasco
Repositorio:Addi. Archivo Digital para la Docencia y la Investigación
OAI Identifier:oai:addi.ehu.eus:10810/75755
Acceso en línea:http://hdl.handle.net/10810/75755
Access Level:acceso embargado
Palabra clave:earnings-based borrowing constraints
collateral-to-loan ratio
misallocation
TFP
GDP per worker
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spelling Borrowing constraints, financial frictions, misallocation and GDP per workerIza Padilla, María AmayaOstolozaga Falcón, Ibaiearnings-based borrowing constraintscollateral-to-loan ratiomisallocationTFPGDP per workerThe aim of this paper is to analyze the effect of relaxing borrowing constraints taking into account that firms may be facing either earnings-based or asset-based borrowing constraints on some aggregates such GDP per worker or TFP. We also analyze the impact on those aggregates of increasing the proportion of firms with earnings-based borrowing constraints. Using the World Bank Enterprise Survey, we show that the proportion of firms whose loans require collateral is lower in those countries whose bankruptcy laws facilitate reorganization. In addition, we show that there are no significant differences in the median/average contract-enforcement scores between countries where bankruptcy laws facilitate reorganization and countries where they do not, and that there is a significant negative link between the contract-enforcement score and the collateral-to-loan ratio. Furthermore, we also show that there is a significant positive correlation between the average proportion of firms in a country whose credit does not require collateral (with cash flow-based debt) with GDP per worker and TFP, but not with the debt-to- GDP ratio. We build a model that takes into account country characteristics in the proportion of firms whose loans require collateral and also in the average collateral-to-loan ratio. We find that policies aimed at increasing the proportion of firms that face borrowing constraints based on earnings rather than on assets, so as to reduce the misallocation of debt, may be as important as those aimed at reducing the collateral-to-loan ratio.Ministerio de Ciencia, Innovación y Universidades, proyecto: PID2019-108718GB-I00, Gobierno Vasco, Grupo consolidado: IT336-19Elsevier2027202520252025info:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10810/75755reponame:Addi. Archivo Digital para la Docencia y la Investigacióninstname:Universidad del País VascoIngléshttps://doi.org/10.1016/j.jmacro.2024.103660info:eu-repo/semantics/embargoedAccesshttp://creativecommons.org/licenses/by-nc-nd/4.0/© 2025 Elsevier under CC BY-NC-ND licenseoai:addi.ehu.eus:10810/757552026-06-18T09:23:17Z
dc.title.none.fl_str_mv Borrowing constraints, financial frictions, misallocation and GDP per worker
title Borrowing constraints, financial frictions, misallocation and GDP per worker
spellingShingle Borrowing constraints, financial frictions, misallocation and GDP per worker
Iza Padilla, María Amaya
earnings-based borrowing constraints
collateral-to-loan ratio
misallocation
TFP
GDP per worker
title_short Borrowing constraints, financial frictions, misallocation and GDP per worker
title_full Borrowing constraints, financial frictions, misallocation and GDP per worker
title_fullStr Borrowing constraints, financial frictions, misallocation and GDP per worker
title_full_unstemmed Borrowing constraints, financial frictions, misallocation and GDP per worker
title_sort Borrowing constraints, financial frictions, misallocation and GDP per worker
dc.creator.none.fl_str_mv Iza Padilla, María Amaya
Ostolozaga Falcón, Ibai
author Iza Padilla, María Amaya
author_facet Iza Padilla, María Amaya
Ostolozaga Falcón, Ibai
author_role author
author2 Ostolozaga Falcón, Ibai
author2_role author
dc.subject.none.fl_str_mv earnings-based borrowing constraints
collateral-to-loan ratio
misallocation
TFP
GDP per worker
topic earnings-based borrowing constraints
collateral-to-loan ratio
misallocation
TFP
GDP per worker
description The aim of this paper is to analyze the effect of relaxing borrowing constraints taking into account that firms may be facing either earnings-based or asset-based borrowing constraints on some aggregates such GDP per worker or TFP. We also analyze the impact on those aggregates of increasing the proportion of firms with earnings-based borrowing constraints. Using the World Bank Enterprise Survey, we show that the proportion of firms whose loans require collateral is lower in those countries whose bankruptcy laws facilitate reorganization. In addition, we show that there are no significant differences in the median/average contract-enforcement scores between countries where bankruptcy laws facilitate reorganization and countries where they do not, and that there is a significant negative link between the contract-enforcement score and the collateral-to-loan ratio. Furthermore, we also show that there is a significant positive correlation between the average proportion of firms in a country whose credit does not require collateral (with cash flow-based debt) with GDP per worker and TFP, but not with the debt-to- GDP ratio. We build a model that takes into account country characteristics in the proportion of firms whose loans require collateral and also in the average collateral-to-loan ratio. We find that policies aimed at increasing the proportion of firms that face borrowing constraints based on earnings rather than on assets, so as to reduce the misallocation of debt, may be as important as those aimed at reducing the collateral-to-loan ratio.
publishDate 2025
dc.date.none.fl_str_mv 2025
2025
2025
2027
dc.type.none.fl_str_mv info:eu-repo/semantics/article
format article
dc.identifier.none.fl_str_mv http://hdl.handle.net/10810/75755
url http://hdl.handle.net/10810/75755
dc.language.none.fl_str_mv Inglés
language_invalid_str_mv Inglés
dc.relation.none.fl_str_mv https://doi.org/10.1016/j.jmacro.2024.103660
dc.rights.none.fl_str_mv info:eu-repo/semantics/embargoedAccess
http://creativecommons.org/licenses/by-nc-nd/4.0/
© 2025 Elsevier under CC BY-NC-ND license
eu_rights_str_mv embargoedAccess
rights_invalid_str_mv http://creativecommons.org/licenses/by-nc-nd/4.0/
© 2025 Elsevier under CC BY-NC-ND license
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv Elsevier
publisher.none.fl_str_mv Elsevier
dc.source.none.fl_str_mv reponame:Addi. Archivo Digital para la Docencia y la Investigación
instname:Universidad del País Vasco
instname_str Universidad del País Vasco
reponame_str Addi. Archivo Digital para la Docencia y la Investigación
collection Addi. Archivo Digital para la Docencia y la Investigación
repository.name.fl_str_mv
repository.mail.fl_str_mv
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score 15,811543

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