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I study whether firms' reliance on intangible assets is an important determinant of financing constraints. I construct new measures of firm-level physical and intangible assets using accounting information on U.S. public firms. I find that firms with a higher share of intangible assets in total assets start smaller, grow faster, and have higher Tobin’s q. Asset tangibility predicts firm dynamics and Tobin’s q up to 30 years but has diminishing predicative power. I develop a model of endogenous financial constraints in which firm size and value are limited by the enforceability of financial contracts. Asset tangibility matters because physical and intangible assets differ in their residual value when the contract is repudiated. This mechanism is qualitatively important to explain stylized facts of firm dynamics and Tobin’s q.

Economic development. --- International finance. --- International monetary system --- International money --- Finance --- International economic relations --- Development, Economic --- Economic growth --- Growth, Economic --- Economic policy --- Economics --- Statics and dynamics (Social sciences) --- Development economics --- Resource curse --- Financial Risk Management --- Investments: Stocks --- Economic Theory --- Demography --- Investment --- Capital --- Intangible Capital --- Capacity --- Financial Markets and the Macroeconomy --- Firm Behavior --- Economics of the Elderly --- Economics of the Handicapped --- Non-labor Market Discrimination --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- International Financial Markets --- Innovation --- Research and Development --- Technological Change --- Intellectual Property Rights: General --- Financial Economics --- Population & demography --- Investment & securities --- Technology --- general issues --- Economic theory & philosophy --- Aging --- Stocks --- Asset valuation --- Financial frictions --- Population and demographics --- Asset and liability management --- Financial institutions --- Economic theory --- Population aging --- Asset-liability management --- Economic forecasting --- United States --- General issues

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We propose a tax-adjusted q model with physical and intangible assets and estimate it with a self-collected comprehensive database of intangible assets. The presence of intangibles changes the accounting and economic measures of q. We show that when tax changes are temporary, the q model can be estimated by adjusting for the firm’s intangible stock and intangible intensity. We estimate our model using temporary investment tax incentive policies in the United States in the early 2000s. When the q-model accounts for intangible assets, the estimated investment elasticity to tax incentives is generally larger than otherwise. It is also larger for intangible-intensive firms, and increases with firm size.

Investment tax credit --- Investments --- Intangible property --- Incorporeal property --- Intangible assets --- Intangibles --- Property --- Capital investments --- Depreciation allowances --- Tax credits --- Econometric models. --- Taxation. --- Law and legislation --- Financial Risk Management --- Investments: General --- Investments: Stocks --- Taxation --- Business Taxes and Subsidies --- Capital Budgeting --- Fixed Investment and Inventory Studies --- Measurement and Data on National Income and Product Accounts and Wealth --- Environmental Accounts --- Taxation, Subsidies, and Revenue: General --- International Financial Markets --- Investment --- Capital --- Intangible Capital --- Capacity --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Public finance & taxation --- Finance --- Macroeconomics --- Investment & securities --- Tax incentives --- Asset valuation --- Investment incentives --- Depreciation --- Stocks --- Taxes --- Asset and liability management --- National accounts --- Financial institutions --- Asset-liability management --- Saving and investment --- United States

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Fixed investment was the most important contributing factor to the boom-bust cycle in Cyprus over the last decade. Investment boomed during a credit boom in mid-2000s, during which the corporate sector borrowed heavily. Investment collapsed after 2008 when the credit boom ended. Investment and corporate balance sheets further deteriorated during the Cypriot banking crisis over 2012–2014. Using firm-level investment and balance sheet data, we find that corporate indebtedness is negatively associated with investment both before and after the banking crisis, although the effect is weaker after the Cypriot banking crisis, possibly due to the reduced role of credit in driving post-crisis investment and growth. Our results suggest the need to repair corporate balance sheets to support sustainable invesetment.

Public investments. --- Financial statements. --- Banks and banking. --- Agricultural banks --- Banking --- Banking industry --- Commercial banks --- Depository institutions --- Finance --- Financial institutions --- Money --- Balance sheets --- Corporate financial statements --- Earnings statements --- Financial reports --- Income statements --- Operating statements --- Profit and loss statements --- Statements, Financial --- Accounting --- Bookkeeping --- Business records --- Corporation reports --- Government investments --- Investments, Public --- Expenditures, Public --- Investments --- Capital budget --- Economic development projects --- Investment of public funds --- Public investments --- Financial statements --- Banks and banking --- E-books --- Banks and Banking --- Financial Risk Management --- Labor --- Money and Monetary Policy --- Investment --- Capital --- Intangible Capital --- Capacity --- Business Fluctuations --- Cycles --- Financial Markets and the Macroeconomy --- Capital Budgeting --- Fixed Investment and Inventory Studies --- Financing Policy --- Financial Risk and Risk Management --- Capital and Ownership Structure --- Value of Firms --- Goodwill --- Public Administration --- Public Sector Accounting and Audits --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Financial Crises --- Wages, Compensation, and Labor Costs: General --- Financial reporting, financial statements --- Monetary economics --- Economic & financial crises & disasters --- Labour --- income economics --- Currencies --- Wages --- Financial crises --- Banking crises --- Public financial management (PFM) --- Finance, Public --- Cyprus --- Income economics

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We explore the differential effects of lender-based macroprudential policies on new mortgage borrowing for households of different income using a comprehensive dataset that links macroprudential policy actions with household survey data for European Union countries. The main results suggest that higher-income households on average experience a larger reduction in mortgage loan size than lower-income households when regulation targeting total lenders’ assets tightens. In contrast, lower-income households on average experience a larger reduction in mortgage loan size than higher-income households when regulation targeting lenders’ capital requirements tightens. We also provide evidence of the different channels through which the differential effects operate.

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We provide broad-based evidence of a firm size premium of total factor productivity (TFP) growth in Europe after the Global Financial Crisis. The TFP growth of smaller firms was more adversely affected and diverged from their larger counterparts after the crisis. The impact was progressively larger for medium, small, and micro firms relative to large firms. It was also disproportionally larger for firms with limited credit market access. Moreover, smaller firms were less likely to have access to safer banks: those that were better capitalized banks and with a presence in the credit default swap market. Horseraces suggest that firm size may be a more important and robust vulnerability indicator than balance sheet characteristics. Our results imply that the tightening of credit market conditions during the crisis, coupled with limited credit market access especially among micro, small, and medium firms, may have contributed to the large and persistent drop in aggregate TFP.

Accounting --- Financial Risk Management --- Money and Monetary Policy --- Production and Operations Management --- Investment --- Capital --- Intangible Capital --- Capacity --- Financing Policy --- Financial Risk and Risk Management --- Capital and Ownership Structure --- Value of Firms --- Goodwill --- Production, Pricing, and Market Structure --- Size Distribution of Firms --- Innovation --- Research and Development --- Technological Change --- Intellectual Property Rights: General --- Measurement of Economic Growth --- Aggregate Productivity --- Cross-Country Output Convergence --- Production --- Cost --- Capital and Total Factor Productivity --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Public Administration --- Public Sector Accounting and Audits --- Financial Crises --- Macroeconomics --- Monetary economics --- Financial reporting, financial statements --- Economic & financial crises & disasters --- Total factor productivity --- Credit default swap --- Credit --- Financial statements --- Financial crises --- Industrial productivity --- Finance, Public --- Germany