Collateral and Small Firm Labor

55 Pages Posted: 29 Jun 2016

See all articles by Kristoph Kleiner

Kristoph Kleiner

Indiana University - Kelley School of Business - Department of Finance

Date Written: October 8, 2015

Abstract

Since small firms are dependent on collateral to access financing, balance sheet shocks can impact employment when revenues are insufficient. Using UK firm level data on real estate holdings and cross-sectional differences in house price growth we find that the average small business extracts $0.20 out of every dollar increase in their real estate value. Due to collateral requirements for even short-term loans, small firms increase not only investment ($0.08) but also employment ($0.03). The decline of the housing sector explains 10% of 2007-2009 unemployment.

Keywords: Small Firms, Collateral, Employment

JEL Classification: G31, R33

Suggested Citation

Kleiner, Kristoph, Collateral and Small Firm Labor (October 8, 2015). Kelley School of Business Research Paper No. 16-49, Available at SSRN: https://ssrn.com/abstract=2704069 or http://dx.doi.org/10.2139/ssrn.2704069

Kristoph Kleiner (Contact Author)

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States

HOME PAGE: http://sites.google.com/site/kristophkleiner

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
98
Abstract Views
795
Rank
485,733
PlumX Metrics