Product Market Effects of Real Estate Collateral

46 Pages Posted: 1 Jun 2015

Date Written: January 1, 2015


This paper exploits shocks to the value of real estate collateral to study how exogenous changes in firms’ external financing capacity affect their competitive performance and industry dynamics. Firms with appreciating collateral tend to gain market share and differentiate themselves from rivals. Shocks to collateral lead to less competitive product markets. The competitive effects of collateral are stronger when a firm competes in more concentrated industries or faces competitors with restricted access to financing. The results are stronger when shocks to real estate are instrumented with local land supply elasticities. These results suggest the importance of strategic effects of collateral.

Keywords: Product market competition; Collateral; Financing capacity; Performance

JEL Classification: G31; G32; G34; L11

Suggested Citation

Alimov, Azizjon, Product Market Effects of Real Estate Collateral (January 1, 2015). Available at SSRN: or

Azizjon Alimov (Contact Author)

City University of Hong Kong ( email )

83 Tat Chee Avenue
Hong Kong
(852) 3442-2168 (Phone)
(852) 3442-0195 (Fax)

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