TY - BOOK ID - 146595157 TI - Financial Shock Transmission to Heterogeneous Firms: The Earnings-Based Borrowing Constraint Channel AU - ChiĊ£u, Livia. AU - Grothe, Magdalena. AU - Schulze, Tatjana. AU - Van Robays, Ine. PY - 2023 SN - 9798400253874 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Asset prices KW - Bonds KW - Contingent Pricing KW - Corporate bonds KW - Currency crises KW - Deflation KW - Diffusion Processes KW - Dynamic Quantile Regressions KW - Dynamic Treatment Effect Models KW - Econometrics & economic statistics KW - Econometrics KW - Economic & financial crises & disasters KW - Economics of specific sectors KW - Economics KW - Economics: General KW - Financial institutions KW - Futures Pricing KW - General Financial Markets: General (includes Measurement and Data) KW - Income economics KW - Inflation KW - Informal sector KW - Interest Rates: Determination, Term Structure, and Effects KW - Investment & securities KW - Investments: Bonds KW - Labor KW - Labour KW - Macroeconomics KW - Monetary economics KW - Monetary Policy KW - Monetary policy KW - Monetary tightening KW - Money and Monetary Policy KW - Option pricing KW - Price Level KW - Prices KW - State Space Models KW - Time-Series Models KW - Wages KW - Wages, Compensation, and Labor Costs: General UR - https://www.unicat.be/uniCat?func=search&query=sysid:146595157 AB - We study the heterogeneous impact of jointly identified monetary policy and global risk shocks on corporate funding costs. We disentangle these two shocks in a structural Bayesian Vector Autoregression framework and investigate their respective effects on funding costs of heterogeneous firms using micro-data for the US. We tease out mechanisms underlying the effects by contrasting traditional financial frictions arising from asset-based collateral constraints with the recent earnings-based borrowing constraint hypothesis, differentiating firms across leverage and earnings. Our empirical evidence strongly supports the earnings-based borrowing constraint hypothesis. We find that global risk shocks have stronger and more heterogeneous effects on corporate funding costs which depend on firms' position within the earnings distribution. ER -