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COVID-19 placed a special role to fiscal policy in rescuing companies short of liquidity from insolvency. In the first … focusing on firms’ pre-crisis financial standing, we estimate the extent to which the policy response induced an insolvency gap … measures being focused on smaller firms, we also examine whether this insolvency gap differs with respect to firm size. Based …
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We empirically analyse the appropriateness of indexing emerging market sovereign debt to US real interest rates. We find that policy-induced exogenous increases in US rates raise default risk in emerging market economies, as hypothesised in the theoretical literature. However, we also find...
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We study the role of bargaining power and outside options for the pricing of over-the-counter interbank loans using a bilateral Nash bargaining model and test the model predictions with detailed transaction-level data from the euro-area interbank market. We find that lender banks with greater...
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Overnight money market rates are the predominant operational target of monetary policy. As a consequence, central banks have redesigned the implementation of monetary policy to keep the deviations of the overnight rate from the key policy rate small and short-lived. This paper uses fractional...
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