Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/297248 
Year of Publication: 
2022
Series/Report no.: 
IFN Working Paper No. 1452
Publisher: 
Research Institute of Industrial Economics (IFN), Stockholm
Abstract: 
We study the impact of financing constraints on corporate risk management. Using data on credit scores matched with unique information on firm level commercial insurance purchases, we find that financing constraints lead to higher insurance spending. We adopt a regression discontinuity design and show that financially constrained firms spend 5-14% more on insurance than otherwise similar unconstrained firms. Our findings add new insights to the longstanding empirical puzzle whether financially constrained firms engage more in risk management. Furthermore, our results, shed light on risk management in smaller, mostly private firms.
Subjects: 
Financing Constraints
Risk Management
Insurance Demand
Credit Scores
Private Firms
JEL: 
D22
D25
G22
G32
Document Type: 
Working Paper

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