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Liquidity, Pledgeability, and the Nature of Lending

Diamond, Douglas W.; Hu, Yunzhi; Rajan, Raghuram Govind - National Bureau of Economic Research - 2021

We develop a theory of how corporate lending and financial intermediation change based on the fundamentals of the firm and its environment. We focus on the interaction between the prospective net worth or liquidity of an industry and the firm's internal governance or pledgeability. Variations in...

Persistent link: https://www.econbiz.de/10012482595

Contingent Credit Under Stress

Acharya, Viral V.; Jager, Maximilian; Steffen, Sascha - National Bureau of Economic Research - 2023

Over the past two decades, banks have increasingly focused on offering contingent credit in the form of credit lines as a primary means of corporate borrowing. We review the existing body of research regarding the rationales for banks' provision of liquidity insurance in the form of credit...

Persistent link: https://www.econbiz.de/10014437040

Procyclical Leverage and Value-at-Risk

Adrian, Tobias - 2013

The availability of credit varies over the business cycle through shifts in the leverage of financial intermediaries. Empirically, we find that intermediary leverage is negatively aligned with the banks' Value-at-Risk (VaR). Motivated by the evidence, we explore a contracting model that captures...

Persistent link: https://www.econbiz.de/10012459718

Procyclicality and Monetary Aggregates

Shin, Hyun Song - 2011

Financial intermediaries borrow in order to lend. When credit is increasing rapidly, the traditional deposit funding (core liabilities) is supplemented with other funding (non-core liabilities). We explore the hypothesis that monetary aggregates reflect the size of non-core and core liabilities...

Persistent link: https://www.econbiz.de/10012461822

The Macroeconomics of Shadow Banking

Moreira, Alan - 2014

collateral is scarce. We call this process shadow banking. A rise in uncertainty raises demand for crash-proof liquidity, forcing … intermediaries to delever and substitute toward safe, collateral- intensive liabilities. Shadow banking shrinks, causing the … liquidity supply to contract, discount rates and collateral premia spike, prices and investment fall. The model produces slow …

Persistent link: https://www.econbiz.de/10012458332

Financial Intermediation, Exchange Rates, and Unconventional Policy in an Open Economy

Céspedes, Luis Felipe - 2012

collateral constraints, and uses the model to study unconventional policies such as credit facilities and foreign exchange …

Persistent link: https://www.econbiz.de/10012460229

Trust and Social Collateral

Mobius, Markus - 2007

individuals generate social collateral that can be used to control moral hazard when agents interact in a borrowing relationship …

Persistent link: https://www.econbiz.de/10012465528

The Design of Bank Loan Contracts, Collateral, and Renegotiation

Gorton, Gary - 1993

are not monotonic in borrower type; (4) inefficient liquidation can occur. In renegotiation seniority and collateral are …

Persistent link: https://www.econbiz.de/10012474689

Economic Growth and Bank Innovation

Gorton, Gary; He, Ping - National Bureau of Economic Research - 2021

Based on archival and survey data we show that the maturity of U.S. business loans has been continuously increasing since the mid-1930s when banks invented the term loan. Concurrently, bank innovation first involved the invention of credit analysis and covenant design. Later, bank innovation...

Persistent link: https://www.econbiz.de/10012660004

Why Doesn't Technology Flow from Rich to Poor Countries?

Cole, Harold L. - 2015

What determines the technology that a country adopts? While many factors affect technological adoption, the efficiency of the country's financial system may also play a significant role. To address this question, a dynamic contract model is embedded into a general equilibrium setting with...

Persistent link: https://www.econbiz.de/10012457810