Vintage Capital and Creditor Protection

Efraim Benmelech, Nittai K. Bergman

NBER Working Paper No. 15735
Issued in February 2010
NBER Program(s):Corporate Finance, Economic Fluctuations and Growth, Industrial Organization, Productivity, Innovation, and Entrepreneurship

We provide novel evidence linking the level of creditor protection provided by law to the degree of usage of technologically older, vintage capital in the airline industry. Using a panel of aircraft-level data around the world, we find that better creditor rights are associated with both aircraft of a younger vintage and newer technology as well as firms with larger aircraft fleets. We propose that by mitigating financial shortfalls, enhanced legal protection of creditors facilitates the ability of firms to make large capital investments, adapt advanced technologies and foster productivity.

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Acknowledgments

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Document Object Identifier (DOI): 10.3386/w15735

Published: Benmelech, Efraim & Bergman, Nittai K., 2011. "Vintage capital and creditor protection," Journal of Financial Economics, Elsevier, vol. 99(2), pages 308-332, February. citation courtesy of

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