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We analyze how a wealth shift to emerging countries may lead to instability in developed countries. Investors exposed to expropriation risk are willing to pay a safety premium to invest in countries with good property rights. Domestic intermediaries compete for such cheap funding by carving out...
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attempt to decrease their exposure to rollover risk. These banks shorten both the maturity of their portfolio of loans as well …
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This paper studies how banks simultaneously manage the two sides of their balance sheet and its implications for bank … risk taking and real economic activity. First, we analyze how changes in funding affect the supply of bank loans. We then …
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bank issues covered bonds backed by a pool of assets that is bankruptcy remote and replenished following losses …. Encumbering assets allows a bank to raise cheap secured debt and expand profitable investment, but it also concentrates risk on …
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