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SUMMARY:Can the cure kill the patient? Corporate credit interventions and 
 debt overhang
DTSTART:20220408T103000
DTEND:20220408T120000
DTSTAMP:20260427T225218Z
UID:c7f8f4a3a97cb324ae924b78e649d5d85b84857b5e03e03a5a80509f
CATEGORIES:Conferences - Seminars
DESCRIPTION:Nicolas Crouzet\, Northwestern University\, Kellogg School of 
 Management\nInterventions in corporate credit markets were a major innovat
 ion in the policy response to the 2020 recession. This paper develops and 
 estimates a model to quantify their impact on borrowing and investment. Ev
 en during downturns\, credit interventions can be a bad policy idea\, beca
 use they exacerbate debt overhang and depress investment in the long run. 
 However\, if the downturn is accompanied by financial market disruptions\,
  they initially help forestall inefficient liquidations. These short term 
 benefits quantitatively dominate the long run overhang costs. Additionally
 \, constraining shareholder distributions\, and targeting high-leverage fi
 rms substantially increases the "bang for the buck" of credit intervention
 s.
LOCATION:UniL Campus\, Extra 126
STATUS:CONFIRMED
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