The Finance Brown Bag Seminar is held by the Institute for Finance, Banking and Insurance (WU Vienna) and the Vienna Graduate School of Finance (VGSF). It serves as a presentation platform for PhD students, faculty members, and visitors. An overview of BBS on the website of the Institute for Finance, Banking and Insurance.
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Giuditta Perinelli, MIT Sloan School of Management
Corporate Loan Moratorium in Times of Crisis
with Alberto Grassi (ECB) and Nils Kerwien (VGSF)
Suspending loan repayments is a widely used crisis tool designed to provide liquidity to firms without direct fiscal costs to the government. We study the take-up and real effects of the 2020 European corporate debt moratorium, which required banks to temporarily accept postponed repayments. Exploiting a discontinuity in eligibility at a €2 million asset threshold for Austrian firms, we show that access to the moratorium relaxes financing constraints, leading to higher cash holdings, investment, and productivity—without persistent increases in debt and without raising default rates. Despite these benefits, take-up among eligible firms was low. We provide evidence that concerns about stigma from relationship banks may have deterred participation. In particular, we document that banks revise upward the “unlikely-to-pay” classification of firms using the policy, even though actual delinquencies do not increase. We incorporate these findings into a dynamic investment model with endogenous default to evaluate alternative credit-relief policies, such as grants.
