Weathering Cash Flow Shocks

• 成果类型: Article
• 署名作者: Brown, James R.; Gustafson, Matthew T.; Ivanov, Ivan T.
• 署名单位: Iowa State University; Iowa State University; Federal Reserve System - USA; Federal Reserve System Board of Governors
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.13024
• 发表日期: 2021
• 页码: 1731-1772
• 关键词: trade credit; financial constraints; Liquidity management; corporate-investment; lines; providers; SUPPLIER; PRIVATE; CHOICE; access

摘要

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 to these shocks by drawing on and increasing the size of their credit lines. Banks charge borrowers for this liquidity via increased interest rates and less borrower-friendly loan provisions. Credit line adjustments occur within one calendar quarter of the shock and persist for at least nine months. Overall, we provide evidence that bank credit lines are an important tool for managing the nonfundamental component of cash flow volatility, especially for solvent, small bank borrowers.