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SaMMF Seminar- Konstantin Milbradt (Northwestern) - “Waiting for Capital with On-Demand Financing”
Konstantin Milbradt (Northwestern) will present “Waiting for Capital with On-Demand Financing” on December 12th.

Format: 60 minutes presentation, followed by a 15 minute Q&A

Abstract: We consider a firm with infrequent access to capital markets, continuous access to costly intermediary financing, and a cost of holding cash. The optimal contract is renegotiation-proof. The intermediary absorbs a share of cash-flow risk, and this share increases as firm depletes its internal cash, suggesting an overlapping pecking order. If the firm runs out of cash, it liquidates if the cash-flow is too risky, otherwise the intermediary extends financing that resembles either private equity or collateralized debt. The model helps explain trends in financial intermediation, such as the rise of private equity and the use of collateralized debt.

Dec 12, 2022 12:00 PM in Eastern Time (US and Canada)

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