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Bankruptcy Exemption of Repo Markets : Too Much Today for Too Little Tomorrow?
Acharya, Viral V.; Anshuman, V. Ravi; Viswanathan, S. - National Bureau of Economic Research - 2024
We examine the desirability of granting "safe harbor" provisions to creditors of financial intermediaries in sale-and-repurchase (repo) contracts. Exemption from an automatic stay in bankruptcy enables financial intermediaries to raise greater liquidity and induces entry of intermediaries with...
Persistent link: https://www.econbiz.de/10014468227
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An IV Hazard Model of Loan Default with an Application to Subprime Mortgage Cohorts
Palmer, Christopher J. - National Bureau of Economic Research - 2023
This paper develops a control-function methodology accounting for endogenous or mismeasured regressors in hazard models. I provide sufficient identifying assumptions and regularity conditions for the estimator to be consistent and asymptotically normal. Applying my estimator to the subprime...
Persistent link: https://www.econbiz.de/10014447321
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Efficient Recapitalization
Philippon, Thomas - 2009
conditions implementation on sufficient bank participation. Preferred stock plus warrants reduces opportunistic participation by … aggregate credit risk exceed the cost of implicit transfers to bank debt holders …
Persistent link: https://www.econbiz.de/10012463719
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Insolvency Resolution and the Missing High Yield Bond Markets
Becker, Bo - 2013
borrowers will use bank loans anywhere, but also bonds when bankruptcy is efficient. The model matches empirical debt mix …-country and using insolvency reforms as natural experiments. Our empirical estimates suggest that a one …-standard-deviation increase in the efficiency of bankruptcy is associated with an increase in the stock of corporate bonds equal to 5% of firm …
Persistent link: https://www.econbiz.de/10012459246
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Default and Renegotiation : A Dynamic Model of Debt
Hart, Oliver - 1997
We analyze the role of debt in persuading an entrepreneur to pay out cash flows, rather than to divert them. In the first part of the paper we study the optimal debt contract -- specifically, the trade-off between the size of the loan and the repayment -- under the assumption that some debt...
Persistent link: https://www.econbiz.de/10012472921
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LDC Borrowing with Default Risk
Sachs, Jeffrey - 1982
short maturities on international loans; and (4) a prevalence of bank lending relative to bond-market lending …
Persistent link: https://www.econbiz.de/10012478182
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Designed to Fail : Effects of the Default Option and Information Complexity on Student Loan Repayment
Cox, James C. - 2018
We ask why so few student loan borrowers enroll in Income Driven Repayment when the majority would benefit from doing so. To do so we run an incentivized laboratory experiment using a facsimile of the government's Student Loan Exit Counseling website. We test the role information complexity,...
Persistent link: https://www.econbiz.de/10012480909
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Rollover Risk and Market Freezes
Acharya, Viral V. - 2010
The crisis of 2007-09 has been characterized by a sudden freeze in the market for short-term, secured borrowing. We present a model that can explain a sudden collapse in the amount that can be borrowed against finitely-lived assets with little credit risk. The borrowing in this model takes the...
Persistent link: https://www.econbiz.de/10012462978
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Rollover Risk and Credit Risk
He, Zhiguo - 2010
This paper models a firm's rollover risk generated by conflict of interest between debt and equity holders. When the firm faces losses in rolling over its maturing debt, its equity holders are willing to absorb the losses only if the option value of keeping the firm alive justifies the cost of...
Persistent link: https://www.econbiz.de/10012462997
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An Empirical Study of the Credit Market with Unobserved Consumer Typers
Gan, Li - 2008
This paper proposes an econometric model to identify unobserved consumer types in the credit market. Consumers choose different amounts of loan because of differences in their time or risk preferences (types). Thus, the unconditional probability of default is modeled using a mixture density...
Persistent link: https://www.econbiz.de/10012464774