skip to content
Aggregate risk and the choice between cash and lines of credit Preview this item
ClosePreview this item
Checking...

Aggregate risk and the choice between cash and lines of credit

Author: Viral V Acharya; Heitor Almeida; Murillo Campello; National Bureau of Economic Research.
Publisher: Cambridge, Mass. : National Bureau of Economic Research, ©2010.
Series: Working paper series (National Bureau of Economic Research), no. 16122.
Edition/Format:   eBook : Document : EnglishView all editions and formats
Summary:
We argue that a firm's aggregate risk is a key determinant of whether it manages its future liquidity needs through cash reserves or bank lines of credit. Banks create liquidity for firms by pooling their idiosyncratic risks. As a result, firms with high aggregate risk find it costly to get credit lines from banks and opt for cash reserves in spite of higher opportunity costs and liquidity premium. We verify our  Read more...
Rating:

(not yet rated) 0 with reviews - Be the first.

Subjects
More like this

 

Find a copy online

Links to this item

Find a copy in the library

&AllPage.SpinnerRetrieving; Finding libraries that hold this item...

Details

Additional Physical Format: Print version:
Acharya, Viral V.
Aggregate risk and the choice between cash and lines of credit.
Cambridge, Mass. : National Bureau of Economic Research, ©2010
(DLC) 2010656182
Material Type: Document, Internet resource
Document Type: Internet Resource, Computer File
All Authors / Contributors: Viral V Acharya; Heitor Almeida; Murillo Campello; National Bureau of Economic Research.
OCLC Number: 644263618
Description: 1 online resource (31, [15] pages) : illustrations.
Series Title: Working paper series (National Bureau of Economic Research), no. 16122.
Responsibility: Viral V. Acharya, Heitor Almeida, Murillo Campello.

Abstract:

We argue that a firm's aggregate risk is a key determinant of whether it manages its future liquidity needs through cash reserves or bank lines of credit. Banks create liquidity for firms by pooling their idiosyncratic risks. As a result, firms with high aggregate risk find it costly to get credit lines from banks and opt for cash reserves in spite of higher opportunity costs and liquidity premium. We verify our model's hypothesis empirically by showing that firms with high asset beta have a higher ratio of cash reserves to lines of credit, controlling for other determinants of liquidity policy. This effect of asset beta on liquidity management is economically significant, especially for financially constrained firms; is robust to variation in the proxies for firms' exposure to aggregate risk and availability of credit lines; works at the firm level as well as the industry level; and is significantly stronger in times when aggregate risk is high. Consistent with the channel that drives these effects in our model, we find that firms with high asset beta face higher spreads on bank credit lines.

Reviews

User-contributed reviews
Retrieving GoodReads reviews...
Retrieving DOGObooks reviews...

Tags

Be the first.
Confirm this request

You may have already requested this item. Please select Ok if you would like to proceed with this request anyway.

Linked Data


Primary Entity

<http://www.worldcat.org/oclc/644263618> # Aggregate risk and the choice between cash and lines of credit
    a schema:Book, schema:MediaObject, schema:CreativeWork ;
    library:oclcnum "644263618" ;
    library:placeOfPublication <http://experiment.worldcat.org/entity/work/data/505217255#Place/cambridge_mass> ; # Cambridge, Mass.
    library:placeOfPublication <http://id.loc.gov/vocabulary/countries/mau> ;
    schema:about <http://id.worldcat.org/fast/842564> ; # Business enterprises--Finance--Econometric models
    schema:about <http://dewey.info/class/330/> ;
    schema:about <http://id.worldcat.org/fast/999682> ; # Liquidity (Economics)
    schema:about <http://experiment.worldcat.org/entity/work/data/505217255#Topic/business_enterprises_finance_econometric_models> ; # Business enterprises--Finance--Econometric models
    schema:about <http://id.worldcat.org/fast/882525> ; # Credit
    schema:bookFormat schema:EBook ;
    schema:contributor <http://viaf.org/viaf/30632846> ; # Heitor Almeida
    schema:contributor <http://viaf.org/viaf/72487328> ; # Murillo Campello
    schema:contributor <http://viaf.org/viaf/135446122> ; # National Bureau of Economic Research.
    schema:copyrightYear "2010" ;
    schema:creator <http://viaf.org/viaf/8314377> ; # Viral V. Acharya
    schema:datePublished "2010" ;
    schema:description "We argue that a firm's aggregate risk is a key determinant of whether it manages its future liquidity needs through cash reserves or bank lines of credit. Banks create liquidity for firms by pooling their idiosyncratic risks. As a result, firms with high aggregate risk find it costly to get credit lines from banks and opt for cash reserves in spite of higher opportunity costs and liquidity premium. We verify our model's hypothesis empirically by showing that firms with high asset beta have a higher ratio of cash reserves to lines of credit, controlling for other determinants of liquidity policy. This effect of asset beta on liquidity management is economically significant, especially for financially constrained firms; is robust to variation in the proxies for firms' exposure to aggregate risk and availability of credit lines; works at the firm level as well as the industry level; and is significantly stronger in times when aggregate risk is high. Consistent with the channel that drives these effects in our model, we find that firms with high asset beta face higher spreads on bank credit lines."@en ;
    schema:exampleOfWork <http://worldcat.org/entity/work/id/505217255> ;
    schema:inLanguage "en" ;
    schema:isPartOf <http://experiment.worldcat.org/entity/work/data/505217255#Series/nber_working_paper_series> ; # NBER working paper series ;
    schema:isPartOf <http://experiment.worldcat.org/entity/work/data/505217255#Series/working_paper_series_national_bureau_of_economic_research> ; # Working paper series (National Bureau of Economic Research) ;
    schema:isSimilarTo <http://worldcat.org/entity/work/data/505217255#CreativeWork/aggregate_risk_and_the_choice_between_cash_and_lines_of_credit> ;
    schema:name "Aggregate risk and the choice between cash and lines of credit"@en ;
    schema:productID "644263618" ;
    schema:publication <http://www.worldcat.org/title/-/oclc/644263618#PublicationEvent/cambridge_mass_national_bureau_of_economic_research_2010> ;
    schema:publisher <http://experiment.worldcat.org/entity/work/data/505217255#Agent/national_bureau_of_economic_research> ; # National Bureau of Economic Research
    schema:url <http://papers.nber.org/papers/w16122> ;
    schema:url <http://ezproxy.eui.eu/login?url=http://www.nber.org/papers/w16122> ;
    schema:url <http://papers.nber.org/papers/16122> ;
    schema:url <http://www.nber.org/papers/w16122> ;
    wdrs:describedby <http://www.worldcat.org/title/-/oclc/644263618> ;
    .


Related Entities

<http://experiment.worldcat.org/entity/work/data/505217255#Agent/national_bureau_of_economic_research> # National Bureau of Economic Research
    a bgn:Agent ;
    schema:name "National Bureau of Economic Research" ;
    .

<http://experiment.worldcat.org/entity/work/data/505217255#Place/cambridge_mass> # Cambridge, Mass.
    a schema:Place ;
    schema:name "Cambridge, Mass." ;
    .

<http://experiment.worldcat.org/entity/work/data/505217255#Series/nber_working_paper_series> # NBER working paper series ;
    a bgn:PublicationSeries ;
    schema:hasPart <http://www.worldcat.org/oclc/644263618> ; # Aggregate risk and the choice between cash and lines of credit
    schema:name "NBER working paper series ;" ;
    .

<http://experiment.worldcat.org/entity/work/data/505217255#Series/working_paper_series_national_bureau_of_economic_research> # Working paper series (National Bureau of Economic Research) ;
    a bgn:PublicationSeries ;
    schema:hasPart <http://www.worldcat.org/oclc/644263618> ; # Aggregate risk and the choice between cash and lines of credit
    schema:name "Working paper series (National Bureau of Economic Research) ;" ;
    .

<http://experiment.worldcat.org/entity/work/data/505217255#Topic/business_enterprises_finance_econometric_models> # Business enterprises--Finance--Econometric models
    a schema:Intangible ;
    schema:hasPart <http://id.loc.gov/authorities/subjects/sh85018286> ;
    schema:name "Business enterprises--Finance--Econometric models"@en ;
    .

<http://id.worldcat.org/fast/842564> # Business enterprises--Finance--Econometric models
    a schema:Intangible ;
    schema:name "Business enterprises--Finance--Econometric models"@en ;
    .

<http://id.worldcat.org/fast/882525> # Credit
    a schema:Intangible ;
    schema:name "Credit"@en ;
    .

<http://id.worldcat.org/fast/999682> # Liquidity (Economics)
    a schema:Intangible ;
    schema:name "Liquidity (Economics)"@en ;
    .

<http://viaf.org/viaf/135446122> # National Bureau of Economic Research.
    a schema:Organization ;
    schema:name "National Bureau of Economic Research." ;
    .

<http://viaf.org/viaf/30632846> # Heitor Almeida
    a schema:Person ;
    schema:familyName "Almeida" ;
    schema:givenName "Heitor" ;
    schema:name "Heitor Almeida" ;
    .

<http://viaf.org/viaf/72487328> # Murillo Campello
    a schema:Person ;
    schema:familyName "Campello" ;
    schema:givenName "Murillo" ;
    schema:name "Murillo Campello" ;
    .

<http://viaf.org/viaf/8314377> # Viral V. Acharya
    a schema:Person ;
    schema:familyName "Acharya" ;
    schema:givenName "Viral V." ;
    schema:name "Viral V. Acharya" ;
    .

<http://worldcat.org/entity/work/data/505217255#CreativeWork/aggregate_risk_and_the_choice_between_cash_and_lines_of_credit>
    a schema:CreativeWork ;
    rdfs:label "Aggregate risk and the choice between cash and lines of credit." ;
    schema:description "Print version:" ;
    schema:isSimilarTo <http://www.worldcat.org/oclc/644263618> ; # Aggregate risk and the choice between cash and lines of credit
    .


Content-negotiable representations

Close Window

Please sign in to WorldCat 

Don't have an account? You can easily create a free account.