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Arm’s Length Method for Comparing Rating Scales
Karminsky, Alexander; Hainsworth, Richard; Solodkov, Vasily - In: Eurasian Economic Review 3 (2013) 2, pp. 114-135
-trivial when more than three credit rating agencies are involved. We propose a method for comparing rating scales, and hence …Investors are being encouraged after the global crisis to reduce their dependence on the largest credit rating agencies … for risk assessments of companies and securities. Comparing risk assessments from different sources rapidly becomes non …
Persistent link: https://www.econbiz.de/10011151917
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Dividends and Bank Capital in the Financial Crisis of 2007-2009
Acharya, Viral V.; Gujral, Irvind; Kulkarni, Nirupama; … - National Bureau of Economic Research (NBER) - 2011
The headline numbers appear to show that even as banks and financial intermediaries suffered large credit losses in the financial crisis of 2007-09, they raised substantial amounts of new capital, both from private investors and through government-funded capital injections. However, on closer...
Persistent link: https://www.econbiz.de/10008868166
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Yesterday's Heroes: Compensation and Creative Risk-Taking
Hong, Harrison; Scheinkman, Jose; Cheng, Ing-Haw - National Bureau of Economic Research (NBER) - 2010
We study the relationship between compensation and risk-taking among finance firms using a neglected insight from principal-agent contracting with hidden action and risk-averse agents. If the sensitivity of pay to stock price or slope does not vary with stock price volatility, then total...
Persistent link: https://www.econbiz.de/10008628366
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Bank Capital and Dividend Externalities
Acharya, Viral V.; Le, Hanh; Shin, Hyun Song - National Bureau of Economic Research (NBER) - 2013
In spite of mounting losses banks continued to pay dividends during the crisis. We present a model that addresses this behavior. By paying out dividends, a bank transfers value to its shareholders away from creditors, among whom are other banks. This way, one bank's dividend payout policy...
Persistent link: https://www.econbiz.de/10010796717
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Impact of the subprime crisis on bank ratings: The effect of the hardening of rating policies and worsening of solvency
Salvador, Carlos; Pastor, Jose Manuel; Fernández de … - In: Journal of Financial Stability 11 (2014) C, pp. 13-31
This paper studies the impact of the subprime crisis on the ratings issued by the rating agencies in evaluating the … the behaviour of the rating agencies. The study designs a methodology to separate the observed change in ratings into two …
Persistent link: https://www.econbiz.de/10011046549
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Corporate liquidity and the contingent nature of bank credit lines: Evidence on the costs and consequences of bank default
May, Anthony D. - In: Journal of Corporate Finance 29 (2014) C, pp. 410-429
I study the impact of Lehman Brothers' bankruptcy and resultant inability to honor its obligations as a lender under committed credit lines. Firms that lost access to a credit line committed by Lehman Brothers experienced abnormal stock returns of −3%, on average, on the day of and day after...
Persistent link: https://www.econbiz.de/10011117523
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Firm location and corporate debt
Arena, Matteo P.; Dewally, Michaël - In: Journal of Banking & Finance 36 (2012) 4, pp. 1079-1092
This study examines the influence of a firm’s geographical location on corporate debt and provides evidence that the higher cost of collecting information on firms distant from urban areas has significant implications on a wide array of corporate debt characteristics. We find that rural firms...
Persistent link: https://www.econbiz.de/10011065659
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Bank Capital and Dividend Externalities
Acharya, Viral V; Le, Hanh; Shin, Hyun Song - C.E.P.R. Discussion Papers - 2014
In spite of mounting losses banks continued to pay dividends during the crisis. We present a model that addresses this behavior. By paying out dividends, a bank transfers value to its shareholders away from creditors, among whom are other banks. This way, one bank's dividend payout policy...
Persistent link: https://www.econbiz.de/10011084101
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Banking and Trading
Boot, Arnoud W A; Ratnovski, Lev - C.E.P.R. Discussion Papers - 2012
We study the effects of a bank’s engagement in trading. Traditional banking is relationship-based: not scalable, long-term oriented, with high implicit capital, and low risk (thanks to the law of large numbers). Trading is transactions-based: scalable, short-term, capital constrained, and with...
Persistent link: https://www.econbiz.de/10011084287
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Bank Capital and Dividend Externalities
Acharya, Viral V; Le, Hanh; Shin, Hyun Song - C.E.P.R. Discussion Papers - 2013
While losses were accumulating during the 2007-09 financial crisis, many banks continued to maintain a relatively smooth dividend policy. We present a model that explains this behavior in a setting where there are financial externalities across banks. In particular, by paying out dividends, a...
Persistent link: https://www.econbiz.de/10011084390