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Liquidity, Liquidity Everywhere, Not a Drop to Use : Why Flooding Banks with Central Bank Reserves May Not Expand Liquidity

Acharya, Viral V.; Rajan, Raghuram G. - 2022

reserve holdings. Normally, central bank balance sheet expansion will enhance the net future availability of liquidity to the … system. However, in episodes of stress when a large fraction of claims on liquidity are exercised, the demand for liquidity … may hoard reserves to bolster their own prospects, contributing significantly to liquidity shortages. Therefore, because …

Persistent link: https://www.econbiz.de/10013307630

Liquidity Dependence and the Waxing and Waning of Central Bank Balance Sheets

Acharya, Viral V.; Chauhan, Rahul Singh; Rajan, Raghuram G. - 2023

in 2017, there was no commensurate shrinkage of these claims on liquidity. Consequently, the financial sector was left … more sensitive to potential liquidity shocks, with weaker-capitalized banks most exposed. This necessitated Fed liquidity … provision in September 2019 and again in March 2020. Liquidity-risk-exposed banks suffered the most drawdowns and the largest …

Persistent link: https://www.econbiz.de/10014355833

Are banks passive liquidity backstops? : deposit rates and flows during the 2007-2009 crisis

Acharya, Viral V.; Mora, Nada - 2011

Persistent link: https://www.econbiz.de/10009413023

How Do Global Banks Scramble for Liquidity? Evidence from the Asset-Backed Commercial Paper Freeze of 2007

Acharya, Viral V. - 2013

In August of 2007, banks faced a freeze in funding liquidity from the asset-backed commercial paper (ABCP) market. We … investigate how banks scrambled for liquidity in response to this freeze and its implications for corporate borrowing. Commercial …

Persistent link: https://www.econbiz.de/10013077991

Monetary Easing, Leveraged Payouts and Lack of Investment

Acharya, Viral V. - 2020

This paper studies a model in which a low monetary policy rate lowers the cost of capital for entrepreneurs, potentially spurring productive investment. Low interest rates, however, also induce entrepreneurs to lever up so as to increase payouts to equity. Whereas such leveraged payouts...

Persistent link: https://www.econbiz.de/10012846842

The Anatomy of the Transmission of Macroprudential Policies

Acharya, Viral V. - 2020

We analyze how regulatory constraints on household leverage—in the form of loan-to-income and loan-to-value limits—affect residential mortgage credit and house prices as well as other asset classes not directly targeted by the limits. Supervisory loan level data suggest that mortgage credit...

Persistent link: https://www.econbiz.de/10012849205

Exorbitant Privilege? Quantitative Easing and the Bond Market Subsidy of Prospective Fallen Angels

Acharya, Viral V.; Banerjee, Ryan; Crosignani, Matteo; … - 2022

We document capital misallocation in the U.S. investment-grade (IG) corporate bond market, driven by quantitative easing (QE). Prospective fallen angels—risky firms just above the IG rating cutoff—enjoyed subsidized bond financing since 2009, especially when the scale of QE purchases peaked...

Persistent link: https://www.econbiz.de/10013298377

Exorbitant Privilege? Quantitative Easing and the Bond Market Subsidy of Prospective Fallen Angels

Acharya, Viral V.; Banerjee, Ryan; Crosignani, Matteo; … - 2022

We document capital misallocation in the U.S. investment-grade (IG) corporate bond market, driven by quantitative easing (QE). Prospective fallen angels–risky firms just above the IG rating cutoff–enjoyed subsidized bond financing since 2009, especially when the scale of QE purchases peaked...

Persistent link: https://www.econbiz.de/10013301918