Finance

- 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

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

Roofstock: The Cloud of Real Estate Investing

By: Marco Di Maggio and Julia Kelley

January 2021 |
Teaching Note |
Faculty Research

Citation

Purchase

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

mPharma (A)

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

January 2021 |
Case |
Faculty Research

Keywords: Strategy; Entrepreneurship; Acquisition; Health; Health Industry; Technology Industry; Ghana

Citation

Educators

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

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

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

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