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Strengthening secured creditors: Implications on debt financing and investment

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  • Guevara, Óscar J.
  • Riutort, Julio

Abstract

This paper investigates the effects of a comprehensive insolvency regulation reform in Colombia, focusing on strengthening secured creditor rights, expanding the collateral menu, and establishing a national collateral registry. Leveraging a difference-in-difference design, the study examines the impact on firms with varying levels of movable assets. The reform significantly increased debt usage for firms with high movable assets, indicating a positive effect on financing. The national collateral registry played a pivotal role, benefiting firms in less financially developed regions. Furthermore, the analysis reveals nuanced interactions between the reform, firm size, and movable assets, suggesting differential effects on large and small enterprises. The study extends the Law and Finance literature, offering firm-level insights into the intricate dynamics between institutional changes and access to debt financing.

Suggested Citation

  • Guevara, Óscar J. & Riutort, Julio, 2024. "Strengthening secured creditors: Implications on debt financing and investment," Journal of Corporate Finance, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:corfin:v:84:y:2024:i:c:s0929119923001864
    DOI: 10.1016/j.jcorpfin.2023.102537
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    More about this item

    Keywords

    Creditor rights; Bankruptcy reform; Secured creditors; Collateral; Movable assets;
    All these keywords.

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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