Liquidity Management in the Great Lockdown. Will There Be A Financial Crisis on Main Street?

How are companies managing their liquidity in the COVID-19 crisis? We will talk about the dash for cash that has been happening since March and the importance of bank credit lines as a source of liquidity for large companies. We will discuss how a liquidity crisis in the corporate sector can trigger a wave of bankruptcies that has the potential to create a full blown financial crisis. We will also discuss the role of government policies such as the Main Street Lending Program in mitigating the risk of such a crisis. Finally, we will speculate about what may happen to US companies in the near future, given what we know about the propagation of the disease and how people are reacting to the slow reopening of the US economy.

Heitor Almeida is the Stanley C. and Joan J. Golder Corporate Finance Professor and academic director of iDegrees at Gies College of Business. He has a PhD in economics from the University of Chicago. Before joining Illinois in 2007, Professor Almeida was an associate professor of finance in the Stern School of Business at the New York University. He is a research associate at the National Bureau of Economic Research. His research has been cited by Wall Street Journal, USA Today, and Financial Times and by prominent policy authorities such as the president of the European Central Bank. His research has received numerous awards such as the Journal of Finance’s Brattle Prize and the Jensen Prize of the Journal of Financial Economics, and has received more than 14,000 citations by other researchers.

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