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Occhino, Filippo - Federal Reserve Bank of Cleveland - 2014

This paper studies how a worsening of the debt overhang distortion on bank lending can explain banking solvency crises that are accompanied by a plunge of bank asset values and by a severe contraction of lending and economic activity. Since the value of bank assets depends on economic prospects,...

Persistent link: https://www.econbiz.de/10010941007

The Role of Interbank Relationships and Liquidity Needs

Craig, Ben; Fecht, Falko; Tumer-Alkan, Gunseli - Federal Reserve Bank of Cleveland - 2014

In this paper, we focus on the interconnectedness of banks and the price they pay for liquidity. We assess how the concentration of credit relationships and the position of a bank in the network topology of the system influence the bank’s ability to meet its liquidity demand. We use quarterly...

Persistent link: https://www.econbiz.de/10011114912

Filling in the Blanks: Network Structure and Interbank Contagion

Anand, Kartik; Craig, Ben - Federal Reserve Bank of Cleveland - 2014

realistic interbank networks that preserve important characteristics of the original interbank market. The method loads the most … probable links with the largest exposures consistent with the total lending and borrowing of each bank, yielding networks with … minimum density. When used in a stress-testing context, the minimum-density solution overestimates contagion, whereas maximum …

Persistent link: https://www.econbiz.de/10011114914

Bankruptcy rules and debt contracting: on the relative efficiency of absolute priority, proportionate priority, and first-come, first-served rules

Longhofer, Stanley D. - Federal Reserve Bank of Cleveland - 1994

An analysis showing that allowing creditors to "run" on a firm in financial distress is socially valuable, since it compensates them for monitoring the firm's condition; in contrast, strict adherence to absolute and proportionate priority rules allows lenders to free ride on the monitoring...

Persistent link: https://www.econbiz.de/10005428231

The role of warrants in corporate reorganizations

Longhofer, Stanley D. - Federal Reserve Bank of Cleveland - 1995

bankruptcy proceedings with stock in the reorganized company, while others receive warrants. By proposing a reorganization plan …

Persistent link: https://www.econbiz.de/10005428266

Credit rationing, bankruptcy cost, and the optimal debt contract for small business

Yan, Ying - Federal Reserve Bank of Cleveland - 1997

An examination of whether the costly random verification scheme affects the optimal debt contract for small business. It finds, contrary to Townsend (1979) and Williamson (1986, 1987), that the standard debt contract is the optimal debt contract with the costly random verification scheme.

Persistent link: https://www.econbiz.de/10005428299

Protection for whom? creditor conflicts in bankruptcy

Longhofer, Stanley D.; Peters, Stephen R. - Federal Reserve Bank of Cleveland - 2000

Revised. In this article we provide a rationale for bankruptcy law that is based on the conflicts among creditors that … occur when a debtor’s liabilities exceed its assets. In the absence of a bankruptcy law, the private debt … important insight because previous theories supporting a role for bankruptcy law are based on the notion that creditors want to …

Persistent link: https://www.econbiz.de/10005428317

Absolute priority rule violations, credit rationing, and efficiency

Longhofer, Stanley D. - Federal Reserve Bank of Cleveland - 1997

A demonstration that violations of the absolute priority rule exacerbate credit rationing problems by reducing the payment lenders receive in default states.

Persistent link: https://www.econbiz.de/10005526659

A note on absolute priority rule violations, credit rationing, and efficiency

Longhofer, Stanley D. - Federal Reserve Bank of Cleveland - 1995

An argument that APR violations exacerbate credit rationing problems by reducing the payment lenders receive in default states.

Persistent link: https://www.econbiz.de/10005729064

Nearsighted justice

Bernhardt, Dan; Nosal, Ed - Federal Reserve Bank of Cleveland - 2003

Chapter 11 structures complex negotiations between creditors and debtors that are overseen by a bankruptcy court. This …

Persistent link: https://www.econbiz.de/10005729076