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Excess control rights, bank capital structure adjustments, and lending

Lepetit, Laetitia; Saghi-Zedek, Nadia; Tarazi, Amine - In: Journal of Financial Economics 115 (2015) 3, pp. 574-591

We investigate whether excess control rights of ultimate owners in pyramids affect banks׳ capital ratio adjustments. When control and cash flow rights are identical, to boost capital ratios banks issue equity without cutting lending. However, when control rights exceed cash flow rights, instead...

Persistent link: https://www.econbiz.de/10011208259

Laying off credit risk: Loan sales versus credit default swaps

Parlour, Christine A.; Winton, Andrew - In: Journal of Financial Economics 107 (2013) 1, pp. 25-45

lending? A bank makes a loan, learns if it needs monitoring, and then decides whether to lay off credit risk. The bank can … transfer credit risk by either selling the loan or buying a credit default swap (CDS). With a CDS, the originating bank retains … the loan's control rights; with loan sales, control rights pass to the loan buyer. Credit risk transfer leads to excessive …

Persistent link: https://www.econbiz.de/10010593831

Trading rules, competition for order flow and market fragmentation

Kwan, Amy; Masulis, Ronald; McInish, Thomas H. - In: Journal of Financial Economics 115 (2015) 2, pp. 330-348

We investigate competition between traditional stock exchanges and new dark trading venues using an important difference in regulatory treatment. Securities and Exchange Commission required minimum pricing increments constrain some stock spreads, causing large limit order queues. Dark pools...

Persistent link: https://www.econbiz.de/10011189257

The impact of central clearing on counterparty risk, liquidity, and trading: Evidence from the credit default swap market

Loon, Yee Cheng; Zhong, Zhaodong Ken - In: Journal of Financial Economics 112 (2014) 1, pp. 91-115

This paper examines the impact of central clearing on the credit default swap (CDS) market using a sample of …. Furthermore, the relation between CDS spreads and dealer credit risk weakens after central clearing begins, suggesting a lowering …

Persistent link: https://www.econbiz.de/10010752915

Endogenous liquidity in credit derivatives

Qiu, Jiaping; Yu, Fan - In: Journal of Financial Economics 103 (2012) 3, pp. 611-631

We study the determination of liquidity provision in the single-name credit default swap (CDS) market as measured by … stock market ahead of major credit events. Furthermore, the level of information heterogeneity plays an important role in …

Persistent link: https://www.econbiz.de/10010571645

Does banking competition affect innovation?

Cornaggia, Jess; Mao, Yifei; Tian, Xuan; Wolfe, Brian - In: Journal of Financial Economics 115 (2015) 1, pp. 189-209

limited access to credit from local banks. We argue that banking competition enables small, innovative firms to secure …

Persistent link: https://www.econbiz.de/10011115776

Price support by bank-affiliated mutual funds

Golez, Benjamin; Marin, Jose M. - In: Journal of Financial Economics 115 (2015) 3, pp. 614-638

Fund managers are double agents; they serve both fund investors and owners of management firms. This conflict of interest may result in trading to support securities prices. Tests of this hypothesis in the Spanish mutual fund industry indicate that bank-affiliated mutual funds systematically...

Persistent link: https://www.econbiz.de/10011208268

The “greatest” carry trade ever? Understanding eurozone bank risks

Acharya, Viral V.; Steffen, Sascha - In: Journal of Financial Economics 115 (2015) 2, pp. 215-236

We show that eurozone bank risks during 2007–2013 can be understood as carry trade behavior. Bank equity returns load positively on peripheral (Greece, Italy, Ireland, Portugal, Spain, or GIIPS) bond returns and negatively on German government bond returns, which generated carry until the...

Persistent link: https://www.econbiz.de/10011189256

The failure of models that predict failure: Distance, incentives, and defaults

Rajan, Uday; Seru, Amit; Vig, Vikrant - In: Journal of Financial Economics 115 (2015) 2, pp. 237-260

on the basis of variables that are reported to investors, ignoring other credit-relevant information. As a result, among …

Persistent link: https://www.econbiz.de/10011189258

“When the cat's away the mice will play”: Does regulation at home affect bank risk-taking abroad?

Ongena, Steven; Popov, Alexander; Udell, Gregory F. - In: Journal of Financial Economics 108 (2013) 3, pp. 727-750

This paper provides the first empirical evidence that bank regulation is associated with cross-border spillover effects through the lending activities of large multinational banks. We analyze business lending by 155 banks to 9,613 firms in 1,976 different localities across 16 countries. We find...

Persistent link: https://www.econbiz.de/10011039216