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Low Inflation : High Default Risk and High Equity Valuations

Smarzynska Javorcik, Beata - 2019

We develop an asset-pricing model with endogenous corporate policies that explains how inflation jointly impacts real asset prices and corporate default risk. Our model includes two empirically grounded nominal frictions: fixed nominal coupons and sticky profitability. Taken together, these two...

Persistent link: https://www.econbiz.de/10012892192

Low Inflation: High Default Risk AND High Equity Valuations

Bhamra, Harjoat S.; Dorion, Christian; Jeanneret, Alexandre - 2018

Persistent link: https://www.econbiz.de/10011957207

Quality of institutions, credit markets and bankruptcy

Hainz, Christa - 2004

The number of firm bankruptcies is surprisingly low in economies with poor institutions. We study a model of bank-firm relationship and show that the bank's decision to liquidate bad firms has two opposing effects. First, the bank receives a payoff if a firm is liquidated. Second, it loses the...

Persistent link: https://www.econbiz.de/10010261107

Creditor passivity: the effects of bank competition and institutions on the strategic use of bankruptcy filings

Hainz, Christa - 2007

Why do banks remain passive? In a model of bank-firm relationship we study the trade-off a bank faces when having defaulting firms declared bankrupt. First, the bank receives a payoff if a firm is liquidated. Second, it provides information about a firm's type to its competitors. Thereby,...

Persistent link: https://www.econbiz.de/10010264275

Equilibrium Theory of Banks' Capital Structure

Gale, Douglas; Gottardi, Piero - 2017

balance the benefits of the provision of liquidity services by bank deposits with the costs of bankruptcy. The risk in the …

Persistent link: https://www.econbiz.de/10011698747

The Impact of Delay: Evidence from Formal Out-of-Court Restructuring

Srhoj, Stjepan; Kovač, Dejan; Shapiro, Jacob N.; … - 2021

Bankruptcy restructuring procedures are used in most legal systems to decide the fate of businesses facing financial … context of Croatia, which introduced a "pre-bankruptcy settlement" (PBS) process in the wake of the Great Recession of 2007 … effectively delays entry into the standard bankruptcy procedure, leads to a lower rate of survival among debtors as well as re …

Persistent link: https://www.econbiz.de/10012657954

Flexible Prices and Leverage

D'Acunto, Francesco; Liu, Ryan; Pflueger, Carolin; … - 2017

The frequency with which firms adjust output prices helps explain persistent differences in capital structure across firms. Unconditionally, the most exible-price firms have a 19% higher long-term leverage ratio than the most sticky-price firms, controlling for known determinants of capital...

Persistent link: https://www.econbiz.de/10011615872

The Relevance of Banks to the European Stock Market

Kick, Andreas; Rottmann, Horst - 2022

Banks have always played an ambivalent role in ﬁnancial markets. On the one hand, they provide essential services for the market; on the other hand, problems in the banking sector can send shock waves through the entire economy. Given this prominent role, it is not surprising that Pereira and...

Persistent link: https://www.econbiz.de/10013353364

Carbon Dioxide as a Risky Asset

Bauer, Adam Michael; Proistosescu, Cristian; Wagner, Gernot - 2023

We develop a financial-economic model for carbon pricing with an explicit representation of decision making under risk and uncertainty that is consistent with the Intergovernmental Panel on Climate Change's sixth assessment report. We find that this approach provides economic support for the...

Persistent link: https://www.econbiz.de/10014290188

Structural Change and the Climate Risk Premium during the Green Transition

Zhou, Sophie; van der Ploeg, Frederick - 2023

We study climate change in a model with a carbon-intensive and a green sector, each subject to stochastic sectoral productivity shocks, and show how the underlying economic structure affects the risk-adjusted discount rate and the climate risk premium in the social cost of carbon (SCC)....

Persistent link: https://www.econbiz.de/10014469744