How Do Internal Capital Markets Work? Evidence from the Great Recession

We study the inner workings of internal capital markets during the 2008–09 recession using a unique dataset of loans between business group firms in an emerging market. Intragroup loans increase quickly during the recession. Firms that are more central in the ownership network simultaneously increas...

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Autores Principales: Buchuk, David, Larrain, Borja, Prem, Mounu, Urzúa Infante, Francisco
Formato: Artículo (Article)
Lenguaje:Inglés (English)
Publicado: Oxford University Press 2019
Materias:
Acceso en línea:https://repository.urosario.edu.co/handle/10336/27812
https://doi.org/10.1093/rof/rfz022
id ir-10336-27812
recordtype dspace
spelling ir-10336-278122020-08-19T14:44:01Z How Do Internal Capital Markets Work? Evidence from the Great Recession ¿Cómo funcionan los mercados de capitales internos? Evidencia de la Gran Recesión Buchuk, David Larrain, Borja Prem, Mounu Urzúa Infante, Francisco G32 - Financing Policy Financial Risk and Risk Management Capital and Ownership Structure Value of Firms Goodwill We study the inner workings of internal capital markets during the 2008–09 recession using a unique dataset of loans between business group firms in an emerging market. Intragroup loans increase quickly during the recession. Firms that are more central in the ownership network simultaneously increase lending and borrowing. Acting like simple intermediaries, central firms do not increase net lending. Our results imply that formal control rights are essential for intermediation in internal capital markets, particularly during distress. In line with previous results on winner-picking, receivers of intragroup loans are high-Q, financially constrained firms, which also perform significantly better than providers during the recession. 2019-10-18 2020-08-19T14:44:01Z info:eu-repo/semantics/article info:eu-repo/semantics/publishedVersion ISSN: 1572-3097 EISSN: 1573-692X https://repository.urosario.edu.co/handle/10336/27812 https://doi.org/10.1093/rof/rfz022 eng info:eu-repo/semantics/restrictedAccess application/pdf Oxford University Press Review of Finance European Finance Review
institution EdocUR - Universidad del Rosario
collection DSpace
language Inglés (English)
topic G32 - Financing Policy
Financial Risk and Risk Management
Capital and Ownership Structure
Value of Firms
Goodwill
spellingShingle G32 - Financing Policy
Financial Risk and Risk Management
Capital and Ownership Structure
Value of Firms
Goodwill
Buchuk, David
Larrain, Borja
Prem, Mounu
Urzúa Infante, Francisco
How Do Internal Capital Markets Work? Evidence from the Great Recession
description We study the inner workings of internal capital markets during the 2008–09 recession using a unique dataset of loans between business group firms in an emerging market. Intragroup loans increase quickly during the recession. Firms that are more central in the ownership network simultaneously increase lending and borrowing. Acting like simple intermediaries, central firms do not increase net lending. Our results imply that formal control rights are essential for intermediation in internal capital markets, particularly during distress. In line with previous results on winner-picking, receivers of intragroup loans are high-Q, financially constrained firms, which also perform significantly better than providers during the recession.
format Artículo (Article)
author Buchuk, David
Larrain, Borja
Prem, Mounu
Urzúa Infante, Francisco
author_facet Buchuk, David
Larrain, Borja
Prem, Mounu
Urzúa Infante, Francisco
author_sort Buchuk, David
title How Do Internal Capital Markets Work? Evidence from the Great Recession
title_short How Do Internal Capital Markets Work? Evidence from the Great Recession
title_full How Do Internal Capital Markets Work? Evidence from the Great Recession
title_fullStr How Do Internal Capital Markets Work? Evidence from the Great Recession
title_full_unstemmed How Do Internal Capital Markets Work? Evidence from the Great Recession
title_sort how do internal capital markets work? evidence from the great recession
publisher Oxford University Press
publishDate 2019
url https://repository.urosario.edu.co/handle/10336/27812
https://doi.org/10.1093/rof/rfz022
_version_ 1676074255529279488
score 11,382149