Financing durable assets

Published

Journal Article

© 2019 American Economic Association. All rights reserved. This paper studies how the durability of assets affects financing. We show that more durable assets require larger down payments making them harder to finance, because durability affects the price of assets and hence the overall financing need more than their collateral value. Durability affects technology adoption, the choice between new and used capital, and the rent versus buy decision. Constrained firms invest in less durable assets and buy used assets. More durable assets are more likely to be rented. Economies with weak legal enforcement invest more in less durable, otherwise dominated assets and are net importers of used assets.

Full Text

Duke Authors

Cited Authors

  • Rampini, AA

Published Date

  • February 1, 2019

Published In

Volume / Issue

  • 109 / 2

Start / End Page

  • 664 - 701

Electronic International Standard Serial Number (EISSN)

  • 1944-7981

International Standard Serial Number (ISSN)

  • 0002-8282

Digital Object Identifier (DOI)

  • 10.1257/aer.20170995

Citation Source

  • Scopus