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Competition in Lending and Credit Ratings

Ahmed, Javed - 2016

This article relates corporate credit rating quality to competition in lending between the public bond market and banks. In the model, the monopolistic rating agency's choice of price and quality leads to an endogenous threshold separating low-quality bank-dependent issuers from higher-quality...

Persistent link: https://www.econbiz.de/10013006572

Aggregate Consequences of Dynamic Credit Relationships

Verani, Stephane - 2015

Which financial frictions matter in the aggregate? This paper presents a general equilibrium model in which entrepreneurs finance a firm with a long-term contract. The contract is constrained efficient because firm revenue is costly to monitor and entrepreneurs may default. The cost of...

Persistent link: https://www.econbiz.de/10013029376

The impact of credit risk mispricing on mortgage lending during the subprime boom

Kahn, James A.; Kay, Benjamin S. - 2019

We provide new evidence that credit supply shifts contributed to the U.S. subprime mortgage boom and bust. We collect original data on both government and private mortgage insurance premiums from 1999-2016, and document that prior to 2008, premiums did not vary across loans with widely different...

Persistent link: https://www.econbiz.de/10012181334

Risky Mortgages, Bank Leverage and Credit Policy

Ferrante, Francesco - 2016

Two key channels that allowed the 2007-2009 mortgage crisis to severely impact the real economy were: a housing net worth channel, as defined by Mian and Sufi (2014), which affected the wealth of leveraged households; and a bank net worth channel, which reduced the ability of financial...

Persistent link: https://www.econbiz.de/10014130918

The Transmission of Monetary Policy Through Bank Lending : The Floating Rate Channel

Ippolito, Filippo; Ozdagli, Ali; Pérez, Ander - 2017

We describe and test a mechanism through which outstanding bank loans affect the firm balance sheet channel of monetary policy transmission. Unlike other debt, most bank loans have floating rates mechanically tied to monetary policy rates. Hence, monetary policy-induced changes to floating rates...

Persistent link: https://www.econbiz.de/10014352397

Un-Used Bank Capital Buffers and Credit Supply Shocks at SMEs During the Pandemic

Berróspide, José M.; Gupta, Arun; Seay, Matthew P. - 2021

Did banks curb lending to creditworthy small and mid-sized enterprises (SME) during the COVID-19 pandemic? Sitting on …. Using a novel set of confidential loan level data that includes private SME firms, we show that "buffer-constrained" banks … (those entering the pandemic with capital ratios close to this regulatory buffer region) reduced loan commitments to SME …

Persistent link: https://www.econbiz.de/10013219081

Supervisor Ratings and the Contraction of Bank Lending to Small Businesses

Kiser, Elizabeth K. - 2017

Bank lending to small firms in the U.S. fell substantially during the recent financial crisis and the ensuing recession. Because small firms account for a disproportionate share of new job creation, lending to these firms could have important implications for the pace of economic recovery. A...

Persistent link: https://www.econbiz.de/10012974736

Motivating Banks to Lend? Credit Spillover Effects of the Main Street Lending Program

Minoiu, Camelia; Zarutskie, Rebecca; Zlate, Andrei - 2021

We study the effects of the Main Street Lending Program (MSLP)—an emergency lending program aimed at supporting the flow of credit to small and mid-sized firms during the COVID-19 crisis on bank lending to businesses. Using instrumental variables for identification and multiple loan-level and...

Persistent link: https://www.econbiz.de/10013309920

Business to Business Credit to Small Firms

Mach, Traci L. - 2014

Following the financial crisis, total outstanding loans to businesses by commercial banks dropped off substantially. Large loans outstanding began to rebound by the third quarter of 2010 and essentially returned to their previous growth trajectory while small loans outstanding continued to...

Persistent link: https://www.econbiz.de/10013049258

Rising Intangible Capital, Shrinking Debt Capacity, and the US Corporate Savings Glut

Falato, Antonio - 2018

This paper explores the hypothesis that the rise in intangible capital is a fundamental driver of the secular trend in US corporate cash holdings over the last decades. Using a new measure, we show that intangible capital is the most important firm-level determinant of corporate cash holdings....

Persistent link: https://www.econbiz.de/10012938237