Mahsa Memarian

We develop a model where intertemporal transactions are essential to smooth consumption of risk-averse agents, yet certain frictions in the market cause that, in equilibrium, the only feasible form of trade are collateralized loans. We find the possibility of multiple equilibria, where the existence and value of these loans may be subject to expectations. We apply the model to several questions, including the link between money and credit, the institutional nature of financial development, and some empirical considerations.

Cities play a crucial role in our societies and shape corporate actions in a multitude of ways. In this paper,
we investigate whether more inclusive and sustainable cities tend to be home of better performing firms. To do so, we examine the association between a city’s quality—intended as its ability to be socially inclusive, environmentally sustainable, and economically competitive—and the profitability of firms located in such city. We examine this relationship using a unique 2014–2016 panel of 27,933 firm-year observations of 9,952 firms based in 127 cities—located in the U.S., Europe, and Asia—and performing a five-level analysis that accounts for firm, industry, city, country, and continent effects. Our findings show that, everything else held constant, city’s quality is positively related to firm profitability and this relationship is stronger for firms in high-tech industries. Our analysis also shows nuanced variations across geographies, with distinct dimensions of the home-city’s quality—ranging from human capital to urban planning—playing a different role in the regions covered in our empirics. Overall, our results corroborate that cities that are more inclusive, environmentally sustainable, and also competitive from an economic standpoint are associated with better firm performance. Our work emphasizes how contextually grounded research can better inform firm-level strategies as well as city-level policies. Implications for future research are also discussed.

This paper provides a new evidence about the link between firm’s location and their stock returns.  Firms located in dense urban areas experience higher productivity due to the flow of ideas and innovation in these areas. Through this productivity channel, the urban density characteristics of the areas in which firms are located affect their stock returns. We use high-resolution satellite images from Google Earth to develop an exogenous measure of potential density increases (PDIs) for the 95 most populated metropolitan statistical areas (MSAs) in the US. This measure represents the proportion of the total area within a one-hour drive from the center of the MSA that could rapidly increase its building density. We find that firms located in areas with high PDIs present lower stock returns. On average, a 10% higher PDI for an MSA results in 0.33% lower excess stock returns for firms located in that MSA.

This paper shows that the effect of spillovers on firms’ investments depends on agglomeration and urban characteristics. By studying firms located in the 95 most populated U.S. MSAs, I explore the casual effect of local agglomeration – in terms of the potential density increase of the areas where firms are located – on firms’ investment decisions and growth. I show that firms located in more urban agglomerated areas with higher potential for density increase present higher levels of investments and more potential for growth. Moreover, such firms tend to issue higher levels of debt so as to finance their investments. These results show that spillover effects are partially explained by the competition for local resources – specifically lands and properties, which are more available in areas with higher potential for urban density increase.

In this paper, I focus on whether and how urban characteristics of the areas in which firms are located influence the effect of firms' corporate real estate holdings on their stock returns. I explore this causal relationship by considering location characteristics of urban areas in term of their potential for further growth and density increase. I examine whether the positive impact of real estate holdings on stock returns found in literature, would be influenced following the addition of potential density increase (PDI) of the area in which firm is located. In order to do so, by adding the interaction of firms’ corporate real estate holdings and our measure of PDIs into the equation, we show that the positive effect of real estate ratio on firm’s excess stock returns is washed out, and turns to be significantly negative after considering the effect of potential density increase. These results are also robust to an identification strategy approach, which addresses the potential endogeneity of the PDI measure to real estate prices.