Showing 1 - 10 of 22
The federal government enacted massive spending in the Pandemic Recession. But was this spending scaled to the magnitude of the economic downturn? We examine the responsiveness of the safety net to the Pandemic Recession and compare it to that in the Great Recession. Using monthly state-level...
Persistent link: https://www.econbiz.de/10014322904
The paper elicits a mechanism by which private leverage choices exhibit strategic complementarities through the reaction of monetary policy. When everyone engages in maturity transformation, authorities have little choice but facilitating refinancing. In turn, refusing to adopt a risky balance...
Persistent link: https://www.econbiz.de/10012463512
National safety nets are imbedded in country-specific regulatory cultures that encompass contradictory goals of nationalistic welfare maximization, merciful treatment of distressed institutions, and bureaucratic blame avoidance. Focusing on this goal conflict, this paper develops two hypotheses....
Persistent link: https://www.econbiz.de/10012465053
In fighting a financial crisis, opacity (keeping the names of banks borrowing at emergency lending facilities secret) and stigma (the cost of having a bank's name revealed) are desirable to restore confidence. Lending facilities raise the perceived average quality of all banks' assets. Opacity...
Persistent link: https://www.econbiz.de/10012455893
We study the distribution of credit during crisis times and its impact on firm indebtedness and macroeconomic risk. Whereas policies can help firms in need of financing, they can lead to adverse selection from riskier firms and higher default risk. We analyze a large-scale program of public...
Persistent link: https://www.econbiz.de/10012938743
COVID-19 has demonstrated the challenges that policymakers, insurers, businesses, and employees face when disaster assistance programs are developed after the pandemic has already started. There is now an opportunity to design and implement effective and efficient solutions to manage the...
Persistent link: https://www.econbiz.de/10012585452
We study the stock market effects of the arrival of the three rounds of "stimulus checks" to U.S. taxpayers and the single round of direct payments to Hong Kong citizens. The first two rounds of U.S. checks appear to have increased retail buying and share prices of retail-dominated portfolios....
Persistent link: https://www.econbiz.de/10013172127
In the decade following the financial crisis of 2008, investment funds in corporate bond markets became prominent market players and generated concerns of financial fragility. The COVID-19 crisis provides an opportunity to inspect their resilience in a major stress event. Using daily microdata,...
Persistent link: https://www.econbiz.de/10012481414
Firms with greater financial flexibility should be better able to fund a revenue shortfall resulting from the COVID-19 shock and benefit less from policy responses. We find that firms with high financial flexibility experience a stock price drop lower by 26% or 9.7 percentage points than those...
Persistent link: https://www.econbiz.de/10012481689
In March of 2020, banks faced the largest increase in liquidity demands ever observed. Firms drew funds on a massive scale from pre-existing credit lines and loan commitments in anticipation of cash flow disruptions from the economic shutdown designed to contain the COVID-19 crisis. The increase...
Persistent link: https://www.econbiz.de/10012481838