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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
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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
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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
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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
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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
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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
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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
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Intermediation Variety
Donaldson, Jason Roderick - 2019
We explain the emergence of a variety of intermediaries in a model based only on differences in their funding costs. Banks have a low cost of capital due to, say, safety nets or money-like liabilities. We show, however, that this can be a disadvantage, because it exacerbates...
Persistent link: https://www.econbiz.de/10012479896
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Unstable Banking
Shleifer, Andrei - 2009
holdings as collateral. We embed such banks in a stylized financial market, in which securitized loans may be mispriced, and …
Persistent link: https://www.econbiz.de/10012463705
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Intermediary Asset Pricing
He, Zhiguo - 2008
We present a model to study the dynamics of risk premia during crises in asset markets where the marginal investor is a financial intermediary. Intermediaries face a constraint on raising equity capital. When the constraint binds, so that intermediaries' equity capital is scarce, risk premia...
Persistent link: https://www.econbiz.de/10012464130