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Finance

Finance

  • Faculty
  • Curriculum
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    • February 2021
    • Article

    A Dynamic Theory of Multiple Borrowing

    By: Daniel Green and Ernest Liu

    Multiple borrowing—a borrower obtains overlapping loans from multiple lenders—is a common phenomenon in many credit markets. We build a highly tractable, dynamic model of multiple borrowing and show that, because overlapping creditors may impose default externalities on each other, expanding financial access by introducing more lenders may severely backfire. Capital allocation is distorted away from the most productive uses. Entrepreneurs choose inefficient endeavors with low returns-to-scale. These problems are exacerbated when investments become more pledgeable or when borrowers have access to more lenders, explaining why increased access to finance does not always improve outcomes.

    • February 2021
    • Article

    A Dynamic Theory of Multiple Borrowing

    By: Daniel Green and Ernest Liu

    Multiple borrowing—a borrower obtains overlapping loans from multiple lenders—is a common phenomenon in many credit markets. We build a highly tractable, dynamic model of multiple borrowing and show that, because overlapping creditors may impose default externalities on each other, expanding financial access by introducing more lenders may...

    • January 2021
    • Case

    Carnival Corporation: Cruising Through COVID-19

    By: Stuart C. Gilson and Sarah Abbott

    In 2020, in response to Covid-19, the cruise industry paused. Carnival was the largest cruise operator, and CEO Arnold Donald positioned the company to survive.

    • January 2021
    • Case

    Carnival Corporation: Cruising Through COVID-19

    By: Stuart C. Gilson and Sarah Abbott

    In 2020, in response to Covid-19, the cruise industry paused. Carnival was the largest cruise operator, and CEO Arnold Donald positioned the company to survive.

    • January 2021
    • Case

    mPharma (A)

    By: Rembrand Koning, John D. Macomber, Pippa Tubman Armerding and Wale Lawal

    mPharma pioneered electronic prescriptions in Ghana, and aimed to increase drug affordability and accessibility in Africa, but the company remained unprofitable. Following investor concerns about mPharma's business, CEO Gregory Rockson considered alternative business models and services that could increase mPharma's profitability and impact.

    • January 2021
    • Case

    mPharma (A)

    By: Rembrand Koning, John D. Macomber, Pippa Tubman Armerding and Wale Lawal

    mPharma pioneered electronic prescriptions in Ghana, and aimed to increase drug affordability and accessibility in Africa, but the company remained unprofitable. Following investor concerns about mPharma's business, CEO Gregory Rockson considered alternative business models and services that could increase mPharma's profitability and impact.

About the Unit

Our strategy is to assemble and nurture a faculty whose interests and skills complement each other, and who work well together:

a) to produce a broad range of finance-related research that is published in top-tier scientific and practitioner journals, and that addresses issues of present and future importance to managers (including regulators and policy makers);

b) to develop highly-relevant and intellectually rigorous MBA and executive education courses; and

c) to mentor future academics through the Business Economics doctoral program.

Our applied focus and access to business organizations are major advantages which are reinforced by our students and our case-based approach. We have a faculty with broad expertise, and we have resources, field contacts, and institutional support, all of which we can leverage to do richer work and be more productive than we could at other institutions.

Recent Publications

A Dynamic Theory of Multiple Borrowing

By: Daniel Green and Ernest Liu
  • February 2021 |
  • Article |
  • Journal of Financial Economics
Multiple borrowing—a borrower obtains overlapping loans from multiple lenders—is a common phenomenon in many credit markets. We build a highly tractable, dynamic model of multiple borrowing and show that, because overlapping creditors may impose default externalities on each other, expanding financial access by introducing more lenders may severely backfire. Capital allocation is distorted away from the most productive uses. Entrepreneurs choose inefficient endeavors with low returns-to-scale. These problems are exacerbated when investments become more pledgeable or when borrowers have access to more lenders, explaining why increased access to finance does not always improve outcomes.
Keywords: Commitment; Multiple Borrowing; Common Agency; Misallocation; Microfinance; Investment; Mathematical Methods
Citation
Find at Harvard
Related
Green, Daniel, and Ernest Liu. "A Dynamic Theory of Multiple Borrowing." Journal of Financial Economics 139, no. 2 (February 2021): 389–404.

Carnival Corporation: Cruising Through COVID-19

By: Stuart C. Gilson and Sarah Abbott
  • January 2021 |
  • Case |
  • Faculty Research
In 2020, in response to Covid-19, the cruise industry paused. Carnival was the largest cruise operator, and CEO Arnold Donald positioned the company to survive.
Keywords: Restructuring; Debt Issuance; Equity Issuances; Convertible Debt; Cruise Lines; Crisis Management; Cash Flow; Restructuring; Capital; Crisis Management; Travel Industry; United States
Citation
Educators
Related
Gilson, Stuart C., and Sarah Abbott. "Carnival Corporation: Cruising Through COVID-19 ." Harvard Business School Case 221-028, January 2021.

Roofstock: The Cloud of Real Estate Investing

By: Marco Di Maggio and Julia Kelley
  • January 2021 |
  • Teaching Note |
  • Faculty Research
Citation
Purchase
Related
Di Maggio, Marco, and Julia Kelley. "Roofstock: The Cloud of Real Estate Investing." Harvard Business School Teaching Note 221-034, January 2021.

mPharma (B)

By: Rembrand Koning, John D. Macomber, Pippa Tubman Armerding and Wale Lawal
  • January 2021 |
  • Supplement |
  • Faculty Research
mPharma pioneered electronic prescriptions in Ghana, and aimed to increase drug affordability and accessibility in Africa, but the company remained unprofitable. Following investor concerns about mPharma's business, CEO Gregory Rockson considered alternative business models and services that could increase mPharma's profitability and impact.
Keywords: Strategy; Health; Health Industry; Technology Industry; Ghana
Citation
Related
Koning, Rembrand, John D. Macomber, Pippa Tubman Armerding, and Wale Lawal. "mPharma (B)." Harvard Business School Supplement 721-429, January 2021.

mPharma (A)

By: Rembrand Koning, John D. Macomber, Pippa Tubman Armerding and Wale Lawal
  • January 2021 |
  • Case |
  • Faculty Research
mPharma pioneered electronic prescriptions in Ghana, and aimed to increase drug affordability and accessibility in Africa, but the company remained unprofitable. Following investor concerns about mPharma's business, CEO Gregory Rockson considered alternative business models and services that could increase mPharma's profitability and impact.
Keywords: Strategy; Entrepreneurship; Acquisition; Health; Health Industry; Technology Industry; Ghana
Citation
Educators
Related
Koning, Rembrand, John D. Macomber, Pippa Tubman Armerding, and Wale Lawal. "mPharma (A)." Harvard Business School Case 721-428, January 2021.

Love It or List It: An Aging Asset on Sixth Ave

By: Charles F. Wu, Moe Bakri, Mimi DiSipio, Clay Macfarlane, Sam Rashin and Baruch Shemtov
  • January 2021 |
  • Case |
  • Faculty Research
Keywords: Real Estate
Citation
Educators
Related
Wu, Charles F., Moe Bakri, Mimi DiSipio, Clay Macfarlane, Sam Rashin, and Baruch Shemtov. "Love It or List It: An Aging Asset on Sixth Ave." Harvard Business School Case 221-004, January 2021.

Love It or List It: An Aging Asset on Sixth Ave

By: Charles F. Wu and Sean Bracken
  • January 2021 |
  • Teaching Note |
  • Faculty Research
Citation
Related
Wu, Charles F., and Sean Bracken. "Love It or List It: An Aging Asset on Sixth Ave." Harvard Business School Teaching Note 221-022, January 2021.

A Half-Deal

By: Marco Di Maggio, Pedro Levindo and Carla Larangeira
  • January 2021 |
  • Supplement |
  • Faculty Research
In June 2020, XP and Itaú faced intensified competition and tension in their partnership, with the latter owning a minority stake at XP. Two years earlier, in May 2017, Itaú had announced it would acquire 49.9% of XP for $1.8 billion, followed by three additional stages leading to company control.  Yet in August 2018, Brazil’s Central Bank, partially barred the deal, stating Itaú could become a minority shareholder.Tensions surfaced as soon as the deal was formalized, with both companies engaging in public attacks across several marketing campaigns, with Itaú estimated to lose around $27 million a day to XP from client migration. Moreover, XP faced increased competition from emerging investment platforms that were gaining ground in Brazil´s market. By mid-2020, XP´s financial results had skyrocketed, taking in $190 million in net income and $743 million in total revenues. As Guilherme Benchimol, XP´s CEO, looks ahead, he must define what strategies they should pursue to achieve further growth, considering competitive forces and market opportunities at hand.
Keywords: Fintech; Financing Strategy; Competition; Competition; Latin America; Brazil
Citation
Related
Di Maggio, Marco, Pedro Levindo, and Carla Larangeira. "A Half-Deal." Harvard Business School Supplement 221-058, January 2021.
More Publications

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    • 11 Dec 2020
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→More Faculty News

HBS Working Knowledge

    • 05 Jan 2021

    The ESG-Innovation Disconnect: Evidence from Green Patenting

    Re: Lauren H. Cohen
    • 14 Dec 2020

    What Does December's Drug-Approval Dash Mean for COVID-19 Vaccines?

    Re: Lauren H. Cohen
    • 30 Nov 2020

    COVID Not Slowing VC Investment

    Re: Paul A. Gompers
→More Working Knowledge Articles

Harvard Business Publishing

    • March 2012
    • Article

    How to Make Finance Work

    By: Robin Greenwood and David S. Scharfstein
    • October 2020
    • Case

    TowerBrook: ESG in Action (A)

    By: Victoria Ivashina, Brian Trelstad and Meaghan Conway
    • 2017
    • Book

    HBR Guide to Buying a Small Business: Think Big, Buy Small, Own Your Own Company

    By: Richard S. Ruback and Royce Yudkoff
→More Harvard Business Publishing

Seminars & Conferences

Jan 29
  • 29 Jan 2021

Hillary Stein | Johnny Tang, Harvard Business School

Finance/Economics Ph.D. Lunch Seminar
→More Seminars & Conferences

Faculty Positions

Harvard Business School seeks candidates in all fields for full time positions. Candidates with outstanding records in PhD or DBA programs are encouraged to apply.
→Learn More

Contact Information

Finance Unit
Harvard Business School
Baker Library | Bloomberg Center
Soldiers Field
Boston, MA 02163
financeunit@hbs.edu

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