Mediating Financial Intermediation

Louis-Marie Harpedanne de Belleville (1, 2, 3) , Aymeric Bellon (4) , Noémie Pinardon-Touati (5)

1 Banque de France - Banque de France
2 PJSE - Paris Jourdan Sciences Economiques
3 PSE - Paris School of Economics
4 The Wharton School
5 HEC Paris - Ecole des Hautes Etudes Commerciales

This paper studies the resolution of disputes between firms and their lenders through external mediators, who suggest a non-legally binding solution to resolve a disagreement after communicating with all parties. We exploit an administrative database on firms' outcomes matched to the French credit registry and plausible exogenous variation in eligibility to public mediators across counties for identification. Credit, employment and investment increase following the mediation, causing an overall reduction in firms' liquidation of 34.6 percentage points. All the effects are driven by firms that borrow from more than one financial institution, supporting the view that mediators solve coordination problems between lenders. Disclaimer: The views expressed herein are those of the authors and do not necessarily represent the views of the Banque de France, its Executive Board, or the mediation.

Mots clés: Mediation; Financial intermediation; Debt overhang; Financial constraints; Bankruptcy; Investment; Employment; Judge instrument

Domaines: Sciences de l'Homme et Société

Louis-Marie Harpedanne de Belleville, Aymeric Bellon, Noémie Pinardon-Touati. Mediating Financial Intermediation. 2021. ⟨hal-03266614⟩