Does Product Market Competition Increase Credit Availability?

20 Pages Posted: 24 Jan 2010 Last revised: 8 Jun 2013

See all articles by Vittoria Cerasi

Vittoria Cerasi

Corte dei conti; Università degli Studi di Milano-Bicocca - Center for European Studies (CefES)

Alessandro Fedele

Free University of Bozen-Bolzano - Faculty of Economics and Management

Date Written: March 2011

Abstract

When there is asymmetric information between investors and firms, credit availability is affected by the value of collateralized productive assets. If liquidation occurs, investors recover a greater value the higher the probability to find a buyer and the higher his willingness to pay to use the assets for production. We extend the idea of complementarities among firms in the same industry (as in Shleifer and Vishny, 1992) to study under which conditions credit availability is enhanced by competition in the product market.

Keywords: product market competition, credit availability, resale of productive assets

JEL Classification: D82, G33, L14

Suggested Citation

Cerasi, Vittoria and Fedele, Alessandro, Does Product Market Competition Increase Credit Availability? (March 2011). Available at SSRN: https://ssrn.com/abstract=1540584 or http://dx.doi.org/10.2139/ssrn.1540584

Vittoria Cerasi (Contact Author)

Corte dei conti ( email )

viale Mazzini
Roma, Roma 00195
Italy

Università degli Studi di Milano-Bicocca - Center for European Studies (CefES) ( email )

U6 Building
Viale Piero e Alberto Pirelli, 22
Milano, 20126
Italy

Alessandro Fedele

Free University of Bozen-Bolzano - Faculty of Economics and Management ( email )

Via Sernesi 1
39100 Bozen-Bolzano (BZ), Bozen 39100
Italy

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