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Low inflation : high default risk AND high equity valuations
Bhamra, Harjoat Singh; Dorion, Christian; Jeanneret, … - 2018
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/10011941263
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Business tax policy under default risk
Comincioli, Nicola; Vergalli, Sergio; Panteghini, Paolo - 2019
In this article we use a stochastic model with one representative firm to study business tax policy under default risk. We will show that, for a given tax rate, the government has an incentive to reduce (increase) financial instability and default costs if its objective function is welfare (tax...
Persistent link: https://www.econbiz.de/10012024508
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A welfare analysis on start-up decisions under default risk
Comincioli, Nicola; Panteghini, Paolo; Vergalli, Sergio - 2021
This short article studies the tax effects on a start-up investment decision under uncertainty. Since the representative firm can decide both when to invest and how much to borrow, the distortive effects are twofold. We thus show that the deadweight loss (namely, the ratio between the welfare...
Persistent link: https://www.econbiz.de/10012698792
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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/10011688427
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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/10012603137
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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/10011597779
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Credit risk in general equilibrium
Eichberger, Jürgen; Rheinberger, Klaus; Summer, Martin - 2014
clearing house (bank) which monitors agents and enforces contracts. Our model develops a concept of bankruptcy equilibrium that … a version of the Capital Asset Pricing Model with bankruptcy. In this case we can characterize equilibrium prices and …
Persistent link: https://www.econbiz.de/10010235825
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The impact of fintech startups on financial snstitutions' performance and default risk
Haddad, Christian; Hornuf, Lars - 2021 - This version: April 24, 2021
We study the impact fintech startups have on the performance and the default risk of traditional financial institutions. We find a positive relationship between fintech startup formations and incumbent institutions' performance for the period from 2005 to 2018 and a large sample of financial...
Persistent link: https://www.econbiz.de/10012509553
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Debt recovery in firm liquidations : do liquidation trustees matter?
Cepec, Jaka; Grajzl, Peter; Zajc, Katarina - 2016
Insolvency systems play a crucial role in protection of creditor rights, yet micro-level empirical evidence on the functioning of insolvency regimes worldwide is sparse. We investigate whether creditors' recovery of outstanding claims, a measure of ex-post efficiency of an insolvency regime,...
Persistent link: https://www.econbiz.de/10011518156
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Illiquidity and under-valuation of firms
Gale, Douglas; Gottardi, Piero - 2009
We study a competitive model in which market incompleteness implies that debt-financed firms may default in some states of nature and default may lead to the sale of the firms' assets at fire sale prices when markets are illiquid. This incompleteness is the only friction in the model and the...
Persistent link: https://www.econbiz.de/10003923631