Weathering Cash Flow Shocks
نویسندگان
چکیده
Unexpectedly severe winter weather, which is arguably exogenous to firm and bank fundamentals, represents a significant cash flow shock for bank-borrowing firms. Firms respond these shocks by drawing on increasing the size of their credit lines. Banks charge borrowers this liquidity via increased interest rates less borrower-friendly loan provisions. Credit line adjustments occur within one calendar quarter persist at least nine months. Overall, we provide evidence that lines are an important tool managing nonfundamental component volatility, especially solvent, small borrowers.
منابع مشابه
Generalized Cash-Flow Taxation
We show the unique form that must be taken by a tax system based entirely on realization accounting to implement a uniform capital income tax, or, equivalently, a uniform wealth tax. This system combines elements of an accrual based capital income tax and a traditional cashflow tax, having many of the attributes of the latter while still imposing a tax burden on marginal capital income. Like th...
متن کاملConditional Cash Transfers, Credit, Remittances, Shocks, and Education:
This work estimates the impact on school enrollment of a Nicaraguan conditional cash transfer program, Red de Protección Social (RPS). RPS is one of a growing number of these programs (e.g. Progresa, Bolsa Escola, and PRAF) that pays households regular cash transfers on the condition that their children attend school and all household members visit health clinics and seminars. A household model...
متن کاملHedging Corporate Cash Flow Risk
We consider optimal hedging decisions for a firm whose stock returns are affected by market returns and an idiosyncratic factor that is orthogonal to the market return. We show that the level of firm’s cash flows depend on the level of the market and the level of the idiosyncratic factor multiplicatively because of compounding. Minimizing the variance of the cash flow requires a substantial off...
متن کاملBank Health and Cash Flow Sensitivity of Cash: Evidence from TSE Listed Firms
Achieving a strong and efficient monetary cycle is of great importance and necessity due to the dependency of corporates on banks in Iran. Owing to the importance of cash management in firms, this study assesses the impact of bank health on Cash flow sensitivity of cash of listed corporates on Tehran Stock Exchange (TSE) by analyzing 102 firms which have received facilities from 20 active Irani...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
ژورنال
عنوان ژورنال: Journal of Finance
سال: 2021
ISSN: ['0022-1082', '1540-6261']
DOI: https://doi.org/10.1111/jofi.13024