Labor market shaping corporate finance decisions: when workers and firms borrow from the same bank

Labor market shaping corporate finance decisions: when workers and firms borrow from the same bank

• Author
• Theo Cotrim Martins
• Co-authors
• Rafael Schiozer , Frederico Mourad
• Abstract

• Are there economies of scope when banks lend to firms and to its’ workers? Using unique administrative data on employment and lending facilities in Brazil, we show that when employees borrow from the same bank as their employer, firm loans are larger and cheaper. We also show that during the Covid-19 pandemic banks targeted subsidized government loans to the firms in which they had greater lending relationship with employees.

• Keywords
• cost of debt, corporate loans, employee loans, employment, credit, employee-employer spillovers, nonfinancial stakeholders.
• Subject Area
• Corporate Finance, Intermediation, and Banking

Back Download