Ozan Güler 

Working Papers

• Bank Specialization, Control Rights, and Real Effects, with Marco Giometti and Stefano Pietrosanti

We study the role of lenders' abilities to collect and process information in financial contracting. Using a large sample of corporate loans, we analyze how banks' industry specialization affects the use of covenants and the outcomes of covenant violations among public U.S. firms. Lenders specialized in the borrower's industry impose less restrictive financial covenants, provide more customized loan terms, and reduce the investment drop following a covenant breach without harming firms' performance. Our results suggest that specialization improves contracting efficiency by lowering information asymmetries between borrowers and lenders. 

• Heterogeneous Firing Costs, Worker Types, and Productivity: Evidence from a Natural Experiment, with Andrea Caggese, Mike Mariathasan, and Klaas Mulier  

We investigate the effect of firing costs on total factor productivity (TFP) in a setting in which firing costs change simultaneously for the entire firm-size distribution, but heterogeneously across workers. We show formally and empirically that the estimated effects on TFP are biased when the production function fails to account for heterogeneously affected worker types. Our bias-corrected results strengthen existing evidence that firing costs negatively affect TFP and corroborate evidence on hiring and firing freezes. They also offer novel evidence on how firing costs affect workforce composition and utilization. Instead, we observe no capital-intensive technology adoption or human capital investments.

• Who gets publicly guaranteed loans? The effect of guarantee fees on loan allocation and pricing (New draft coming soon), with Ilia Samarin

This paper studies public Belgian loan guarantees during COVID-19 to examine how fees affect loan allocation and pricing. Using credit register data, we find that banks are more likely to grant non-guaranteed loans, at better conditions, to more important borrowers, suggesting that banks use non-guaranteed lending to help more important borrowers avoid paying guarantee fees. Guaranteed loans partially substitute pre-existing non-guaranteed loans, but the degree of substitution decreases with borrower importance. The effects are stronger for better-capitalized banks. Our results provide novel evidence that fees discourage lending under the guarantee program, which thus covers riskier loans to less important borrowers.

Publications

• The Real Effects of Banks' Corporate Credit Supply: A literature Review, Economic Inquiry (2021)

with Mike Mariathasan, Klaas Mulier, and Nejat Gokhan Okatan

In this article, we review the rapidly growing literature on the real effects of banks' corporate credit supply. We cover recent methodological advances and provide an in-depth survey of the existing evidence. The literature consistently shows that credit supply contractions lead to adverse real outcomes, but economic magnitudes vary across samples and identification strategies. This variation has become smaller in more recent work, using highly granular data. We further document heterogeneity in firm outcomes and show that the evidence is more ambiguous for expansionary shocks. Our analysis allows us to identify current knowledge gaps and worthwhile avenues for future research.

Work in Progress

• Misreporting and Guaranteed Loans, with Mircea Epure, Dmitry Khametshin, and Sergio Mayordomo

• Strategically Small Firms and the Real Effects of Public Grants in a Crisis,  with Mircea Epure and Amedeo Pugliese

• The Real Effects of Bank Supervision