Refer to the end of this article for video links of this event.
The 3rd International Conference on Global Financial Stability and Prosperity was hosted by the IGF in Sydney on July 2, 2014. Professor Murillo Campello from Cornell University was invited as the keynote speaker of this forum. His presentation topic was:
“How Laws Affect Credit Expansion and Real Outcomes: In Search of New Directions.”
Professor Campello talked about the changes in secured debt transactions as a result of the recent reforms in the Eastern European countries. His speech addressed important research areas, such as contractibility, capital structure and credit availability. This speech is based on his recent paper “Enhancing the Contracting Space: Collateral Menus, Access to Credit and Economic Activity” with Mauricio Larrain from Columbia University.
The Abstract of this paper is as followed:
Abstract
A recent wave of reforms across Eastern European countries gave more flexibility and information for parties to engage in secured debt transactions, also reducing court involvement. Critically, the menu of assets accepted as pledges in secured transactions was increased to include movable assets" (e.g., machinery and equipment). Contrasting firms operating in industries with differential use of movable and immovable assets, difference-in-differences tests show that firms operating more movable assets borrowed more, invested more, hired more, and became more efficient and profitable following those changes in contracting. The reforms also democratized access to credit, with more firms (particularly small ones) abandoning their zero-leverage status. Notably, results are modulated by the level of efficiency of local courts, with larger credit expansion taking place in jurisdictions where courts were previously less efficient. The financial deepening we document triggered important capital and employment reallocation effects: Firms whose assets are most sensitive to the reform observe a sharp increase in their share of capital stock and employment in the economy.
Professor Campello accepted two interviews conducted by the IGF.
The first interview is regarding How Laws Affect Credit Expansion and Real Outcomes.
The second interview is regarding the Economic Challenges of Global Economy in the post-Global Financial Crisis.