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Liquidity provision: lessons from a natural experiment

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dc.affiliation.dptoUC3M. Departamento de Economía de la Empresaes
dc.contributor.authorBermejo, Vicente J.
dc.contributor.authorAbad, José M.
dc.date.accessioned2015-12-18T16:39:24Z
dc.date.available2015-12-18T16:39:24Z
dc.date.issued2015-07
dc.description.abstractWe study the reaction of more than 60,000 firms to a large unexpected liquidity shock in Spain during a severe recessionary period. The Spanish central government repaid in 2012 almost 30bn euros (approximately 3% of GDP) of arrears that Territorial Administrations had been accumulating for years. We assess the economic impact of the plan using two alternative estimation strategies. First, we use a differences-in-differences (DID) approach that exploits heterogeneity in the size of the liquidity received by firms. Second, we take advantage of the plan's plausibly exogenous disbursement implementation and run a DID procedure using as control group some firms that were paid a year later. Overall, we find that a governmental liquidity injection during a recession increases corporate investment significantly: on average firms use 4% of cash transfers for investment. This effect is stronger for firms with lower default risk and higher investment opportunities. Firms with higher default risk are more prone to repay financial debt. On average, firms use 8% of cash transfers to repay financial debt.en
dc.description.sponsorshipVicente also acknowledges nancial assistance from the International Mobility Program UC3M.en
dc.format.mimetypeapplication/pdf
dc.identifier.issn2387-175X
dc.identifier.repecwb1503
dc.identifier.urihttps://hdl.handle.net/10016/22115
dc.identifier.uxxiDT/0000001416
dc.language.isoenges
dc.publisherUniversidad Carlos III de Madrid. Departamento de Economía de la Empresaes
dc.relation.ispartofseriesUC3M Working Papers Businessen
dc.relation.ispartofseries15-03
dc.rightsAtribución-NoComercial-SinDerivadas 3.0 España*
dc.rights.accessRightsopen accesses
dc.rights.urihttp://creativecommons.org/licenses/by-nc-nd/3.0/es/*
dc.subject.ecienciaEconomíaes
dc.subject.jelG31
dc.subject.jelG32
dc.subject.jelG38
dc.subject.jelE51
dc.subject.otherLiquidityen
dc.subject.otherInvestmenten
dc.subject.otherDefault risken
dc.subject.otherArrearsen
dc.titleLiquidity provision: lessons from a natural experimenten
dc.typeworking paper*
dc.type.hasVersionSMUR*
dspace.entity.typePublication
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