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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

Creditor Rights and Corporate Risk-Taking

Acharya, Viral V. - 2010

We analyze the link between creditor rights and firms' investment policies, proposing that stronger creditor rights in bankruptcy reduce corporate risk-taking. In cross-country analysis, we find that stronger creditor rights induce greater propensity of firms to engage in diversifying...

Persistent link: https://www.econbiz.de/10013149976

Does the Lack of Financial Stability Impair the Transmission of Monetary Policy?

Acharya, Viral V. - 2019

We investigate the transmission of central bank liquidity to bank deposits and loan spreads in Europe over the period … bank liquidity does not translate into lower loan spreads for high-risk banks for maturities beyond one year, even as it …

Persistent link: https://www.econbiz.de/10012858814

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...

Persistent link: https://www.econbiz.de/10013293193

Monetary Easing, Leveraged Payouts and Lack of Investment

Acharya, Viral V.; Plantin, Guillaume - 2022

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/10013322932

Monetary Easing, Leveraged Payouts and Lack of Investment

Acharya, Viral V. - 2020

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

The Anatomy of the Transmission of Macroprudential Policies

Acharya, Viral V.; Bergant, Katharina; Crosignani, Matteo; … - 2022

Persistent link: https://www.econbiz.de/10013307655