Type
Article
Titre
Real Estate Prices and Corporate Investment: Theory and Evidence of Heterogeneous Effects across Firms
Dans
Journal of Money, Credit and Banking
Auteur(s)
FOUGERE Denis - Observatoire sociologique du changement (Auteur)
LECAT Rémy - Banque de France (Auteur)
RAY Simon - Banque de France (Auteur)
Éditeur
US : Wiley-Blackwell
Volume
51
Numéro
6
Pages
1503 - 1546 p.
ISSN
00222879
DOI
https://doi.org/10.1111/jmcb.12631
Mots clés
real estate prices, firms'investment, credit, France
Résumé
EN
In this paper, we investigate the effect of real estate prices on productive investment. We build a theoretical framework of firms' investment with credit rationing and real estate collateral. We show that real estate prices affect firms' borrowing capacities through two channels. An increase in real estate prices raises the value of the firms' pledgeable assets and mitigates the agency problem characterizing the creditor–entrepreneur relationship. It simultaneously cuts the expected profit due to the increase in the cost of inputs. We test our theoretical predictions using a large French database. We do find heterogeneous effects of real estate prices on productive investment depending on the position of the firms in the sectoral distributions of real estate holdings.

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