We examine the effect of relationship-specific investment on the use of detailed contracts using data on transactions from a survey of Romanian firms. In those transactions, seller relationship-specific investment increases the amount of contractual detail, while buyer relationship-specific investment decreases it. We interpret these results using a hostages model applied to cash-flow and credi...

In this paper, we propose an explanation for the prominent role of manufacturers in the financing of their own product sales— so called “captive finance.” By lending against their own product as collateral, durable goods manufacturers with market power can commit to restrict production and maintain resale values in future periods, preserving rents today. Using data on captive financing support ...

This paper sets out a new research design to test for price discrimination by sellers in the housing market. The design controls carefully for unobserved differences in the quality of neighborhoods and homes purchased by buyers of each race, using novel panel data from over two million repeat-sales housing transactions in four metropolitan areas. The results indicate that black and Hispanic hom...

Demand for skiing expanded rapidly in the 1980s, fell quite dramatically at the start of the 1990s as the economy declined but has not subsequently recovered. Two possible explanations are explored. The ®rst is based on perceiving skiing as a new product to most consumers, which reached maximum growth in 1989. Current levels now largely represent `repeat buyers'. The alternative approach sees t...

We examine the participation of public and private firms in merger waves and productivity outcomes. We show that public firms participate more than private firms as buyers and sellers of assets and their participation is more cyclical. Public firms are affected more by credit spreads and aggregate market valuation. Public firm transactions are also impacted positively by their stock market valu...

In a New Monetarist framework, we study the trade of indivisible goods under credit, divisible money and divisible asset in a frictional market. We show how indivisibility on the goods side, instead of the money or asset side, matters for equilibria. The bargaining solution generates a price that is independent of nominal interest rate, dividend value of the asset, or the number of active buyer...

This paper examines racial and ethnic differences in high cost mortgage lending in seven diverse metropolitan areas from 2004-2007. Even after controlling for credit score and other key risk factors, African-American and Hispanic home buyers are 105 and 78 percent more likely to have high cost mortgages for home purchases. The increased incidence of high cost mortgages is attributable to both s...

I develop an equilibrium model of housing and mortgage markets where house prices, mortgage interest rates, and leverage ratios are all determined endogenously. Agents are forward looking and have rational expectations. House prices adjust so that demand from new buyers clears with supply created by existing sellers. Housing demand is affected by the price and availability of contracts in the m...

Credit management is one of the most essential activities in a company and cannot be neglected by any entity involved supply credit lines no matter nature its business. Problems that affect SACCOs are several challenge on Sacco’s cash flows; hence, affecting smooth running businesses. Whenever businesses extend credit, assumption always buyers will pay promptly. This has however made unable to ...