Journal articles
Real Estate Prices and Corporate Investment: Theory and Evidence of Heterogeneous Effects across Firms
Abstract : In this paper, we investigate the effect of real estate prices on productive investment. We build a theoretical framework of firms' investment with credit rationing and real estate collateral. We show that real estate prices affect firms' borrowing capacities through two channels. An increase in real estate prices raises the value of the firms' pledgeable assets and mitigates the agency problem characterizing the creditor–entrepreneur relationship. It simultaneously cuts the expected profit due to the increase in the cost of inputs. We test our theoretical predictions using a large French database. We do find heterogeneous effects of real estate prices on productive investment depending on the position of the firms in the sectoral distributions of real estate holdings.
Cited literature [30 references]
https://hal-amu.archives-ouvertes.fr/hal-02274289
Contributor : Elisabeth Lhuillier <>
Submitted on : Thursday, March 12, 2020 - 11:22:48 AM
Last modification on : Wednesday, August 5, 2020 - 3:14:15 AM
Long-term archiving on: : Saturday, June 13, 2020 - 2:18:30 PM
Contributor : Elisabeth Lhuillier <>
Submitted on : Thursday, March 12, 2020 - 11:22:48 AM
Last modification on : Wednesday, August 5, 2020 - 3:14:15 AM
Long-term archiving on: : Saturday, June 13, 2020 - 2:18:30 PM
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