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Bigio, Saki - 2019

Financial crises are particularly severe and lengthy when banks fail to recapitalize after bearing large losses. We present a model that explains the slow recovery of bank capital and economic activity. Banks provide intermediation in markets with information asymmetries. Large equity losses...

Persistent link: https://www.econbiz.de/10012480505

The Cross-Section of Hurdle Rates for Capital Budgeting : An Empirical Analysis of Survey Data

Jagannathan, Ravi - 2011

Whereas Poterba and Summers (1995) find that firms use hurdle rates that are unrelated to their CAPM betas, Graham and Harvey (2001) find that 74% of their survey firms use the CAPM for capital budgeting. We provide an explanation for these two apparently contradictory conclusions. We find that...

Persistent link: https://www.econbiz.de/10012461887

Borrow Cheap, Buy High? The Determinants of Leverage and Pricing in Buyouts

Axelson, Ulf - 2010

This paper provides an empirical analysis of the financial structure of large buyouts. We collect detailed information on the financing of 1157 worldwide private equity deals from 1980 to 2008. Buyout leverage is cross-sectionally unrelated to the leverage of matched public firms, and is largely...

Persistent link: https://www.econbiz.de/10012462699

Credit within the firm

Pistaferri, Luigi - 2010

We exploit time variation in the degree of development of local credit markets and matched employer-employee data to assess the role of the firm as an internal credit market. In less developed local credit markets firms can offer a flatter wage-tenure profile than firms in more developed credit...

Persistent link: https://www.econbiz.de/10012462727

Decoupling and Recoupling

Korinek, Anton - 2010

We develop a stylized model that captures the phenomena of decoupling and recoupling in an environment where heterogeneous entrepreneurial sectors face financial constraints in their relationship with a common set of lenders. In response to adverse shocks, a financially constrained sector must...

Persistent link: https://www.econbiz.de/10012462744

Household Leverage and the Recession of 2007 to 2009

Mian, Atif R. - 2010

We show that household leverage as of 2006 is a powerful statistical predictor of the severity of the 2007 to 2009 recession across U.S. counties. Counties in the U.S. that experienced a large increase in household leverage from 2002 to 2006 showed a sharp relative decline in durable consumption...

Persistent link: https://www.econbiz.de/10012462755

Corporate Bond Default Risk : A 150-Year Perspective

Giesecke, Kay - 2010

We study corporate bond default rates using an extensive new data set spanning the 1866-2008 period. We find that the corporate bond market has repeatedly suffered clustered default events much worse than those experienced during the Great Depression. For example, during the railroad crisis of...

Persistent link: https://www.econbiz.de/10012462804

The Consequences of Entrepreneurial Finance : A Regression Discontinuity Analysis

Kerr, William R. - 2010

This paper documents the role of angel funding for the growth, survival, and access to follow-on funding of high … funding and those that do not. This technique exploits that a small change in the collective interest levels of the angels can … lead to a discrete change in the probability of funding for otherwise comparable ventures. We first show that angel funding …

Persistent link: https://www.econbiz.de/10012462820

The Influence of the Home Owners' Loan Corporation on Housing Markets During the 1930s

Fishback, Price V. - 2010

Problems with mortgage financing are widely considered to be a major cause of the recent financial meltdown. Several modern programs have been designed to mimic the Home Owners' Loan Corporation of the 1930s. The HOLC replaced the toxic assets on the balance sheets of financial institutions by...

Persistent link: https://www.econbiz.de/10012462827

"Unfunded Liabilities" and Uncertain Fiscal Financing

Davig, Troy - 2010

We develop a rational expectations framework to study the consequences of alternative means to resolve the "unfunded liabilities'' problem---unsustainable exponential growth in federal Social Security, Medicare, and Medicaid spending with no plan to finance it. Resolution requires specifying a...

Persistent link: https://www.econbiz.de/10012462870