Date of Award
Doctor of Philosophy (PhD)
Guillermo L. Ordonez
Michael R. Roberts
This thesis focuses on two themes in the field of empirical corporate finance and
banking. First, the importance of credit market structure for price and non-price
conditions of credit (first and second chapter); second, the importance of financing
frictions for the allocation of control rights over firms (third chapter).
The first chapter investigates the role of competition between lenders in determining
how changes in capital requirements passthrough to the cost of credit for firms.
Exploiting a drop in capital requirements through a Regression Discontinuity Design
and detailed data on credit relationships from the Bank of Italy’s Credit Register, I
show that firms with lower switching costs between credit providers experienced a
much larger drop in the cost of credit as a result of the drop in capital requirements.
The second chapter focuses on the importance of bank specialization in monitoring
specific projects for the allocation of control (covenants) and cash flow (cost of credit)
rights in syndicated lending. Using detailed information on credit relationships in
the syndicated loan market, I document that banks specialize in lending to specific
industries and that this specialization is persistent over time. Then, I show evidence
that specialized banks retain less control rights (laxer covenants) when they arrange
loans for firms within their specialization sector. Such evidence is coherent with
information advantage explanations of bank specialization.
The third chapter studies how credit market frictions affecting younger managers
can explain the prevalence of senior managers in Italy. Using country-level and firmlevel
survey data, I document the prevalence of over-65 year old CEO and entrepreneurs
in Italy; using firm-level data, I show that only in Italy it is the case that firms led
by younger people are more likely to be denied credit. I then draft a simple general
equilibrium model of allocation of control rights over firms to study in which cases
such friction leads to misallocation of control.
Pietrosanti, Stefano, "Essays In Banking And Corporate Finance" (2020). Publicly Accessible Penn Dissertations. 4252.