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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

Climate Finance

Giglio, Stefano - 2020

We review the literature studying interactions between climate change and financial markets. We first discuss various approaches to incorporating climate risk in macro-finance models. We then review the empirical literature that explores the pricing of climate risks across a large number of...

Persistent link: https://www.econbiz.de/10012482445

Market Liquidity and Funding Liquidity

Brunnermeier, Markus K. - 2007

' funding liquidity - i.e., the ease with which they can obtain funding. Traders provide market liquidity, and their ability to … do so depends on their availability of funding. Conversely, traders' funding, i.e., their capital and the margins they … market liquidity and funding liquidity are mutually reinforcing, leading to liquidity spirals. The model explains the …

Persistent link: https://www.econbiz.de/10012465717

Pledgeability, Industry Liquidity, and Financing Cycles

Diamond, Douglas W. - 2017

Why are downturns following episodes of high valuations of firms so severe and long? Why do firms take on high debt when they anticipate high valuations, and underperform subsequently? In this paper, we propose a theory of financing cycles where the control rights to enforce claims in an asset...

Persistent link: https://www.econbiz.de/10012455625

Khan, B. Zorina - 2017

Scholars engage in extensive debate about the role of families and corporations in economic growth. Some propose that personal ties provide a mechanism for overcoming such transactions costs as asymmetrical information, while others regard familial connections as conduits for inefficiency, with...

Persistent link: https://www.econbiz.de/10012455628

Customers and Investors : A Framework for Understanding Financial Institutions

Merton, Robert C. - 2015

Financial institutions have both investors and customers. Investors, such as those who invest in stocks and bonds or private/public-sector guarantors of institutions, expect an appropriate risk-adjusted return in exchange for the financing and risk-bearing that they provide. Customers of a...

Persistent link: https://www.econbiz.de/10012457409

Equilibrium Corporate Finance and Intermediation

Bisin, Alberto - 2014

Furthermore, equilibria may display specialization on the part of identical firms and, when equilibria are constrained inefficient, may exhibit excessive aggregate risk. Financial decisions of the corporate sector are determined at equilibrium and depend not only on the nature of financial...

Persistent link: https://www.econbiz.de/10012458322

Capital Market Financing, Firm Growth, Firm Size Distribution

Didier, Tatiana - 2014

Which firms issue equity and debt in domestic and international markets and what happens to their assets, sales, and number of employees? To answer these questions, we assemble a new dataset on firm-level capital raising activity during 1991-2011, which we match with firm attributes for 45,527...

Persistent link: https://www.econbiz.de/10012458331

Crowding Out Redefined : The Role of Reserve Accumulation

Reinhart, Carmen M. - 2013

It is well understood that investment serves as a shock absorber at the time of crisis. The duration of the drag on investment, however, is perplexing. For the nine Asian economies we focus on in this study, average investment/GDP is about 6 percentage points lower during 1998-2012 than its...

Persistent link: https://www.econbiz.de/10012459011

Financing as a Supply Chain : The Capital Structure of Banks and Borrowers

Gornall, William - 2013

We develop a model of the joint capital structure decisions of banks and their borrowers. Strikingly high bank leverage emerges naturally from the interplay between two sets of forces. First, seniority and diversification reduce bank asset volatility by an order of magnitude relative to that of...

Persistent link: https://www.econbiz.de/10012459028