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Asset Liquidity and International Portfolio Choice

Geromichalos, Athanasios - 2011

over faster than domestic assets because the former have desirable liquidity properties, but represent inferior saving …

Persistent link: https://www.econbiz.de/10013121055

Optimal Taxation in the Presence of Bailouts

Panageas, Stavros - 2010

The termination of a representative financial firm due to excessive leverage may lead to substantial bankruptcy costs. A government in the tradition of Ramsey (1927) may be inclined to provide transfers to the firm so as to prevent its liquidation and the associated deadweight costs. It is shown...

Persistent link: https://www.econbiz.de/10013150643

Bailouts, the Incentive to Manage Risk, and Financial Crises

Panageas, Stavros - 2010

A firm's termination leads to bankruptcy costs. This may create an incentive for outside stakeholders or the firm's debtholders to bail out the firm as bankruptcy looms. Because of this implicit guarantee, firm shareholders have an incentive to increase volatility in order to exploit the...

Persistent link: https://www.econbiz.de/10013152555

Fire Sales in a Model of Complexity

Caballero, Ricardo J. - 2009

Financial assets provide return and liquidity services to their holders. However, during severe financial crises many … asset prices plummet, destroying their liquidity provision function at the worst possible time. In this paper we present a … not control or understand. The liquidity of the market quickly vanishes and a financial crisis ensues. The model exhibits …

Persistent link: https://www.econbiz.de/10013155022

An Economic Analysis of Transnational Bankruptcies

Bebchuk, Lucian A. - 2008

This paper analyzes the effects of the legal rules governing transnational bankruptcies. We compare a regime of territoriality' -- in which assets are adjudicated by the jurisdiction in which they are located at the time of the bankruptcy -- with a regime of universality are adjudicated in a...

Persistent link: https://www.econbiz.de/10012774901

Zombie Lending and Depressed Restructuring in Japan

Caballero, Ricardo J. - 2010

In this paper, we propose a bank-based explanation for the decade-long Japanese slowdown following the asset price collapse in the early 1990s. We start with the well-known observation that most large Japanese banks were only able to comply with capital standards because regulators were lax in...

Persistent link: https://www.econbiz.de/10012761673

Optimal Defaults for Corporate Law Evolution

Bebchuk, Lucian A. - 2009

Public corporations live in a dynamic and ever-changing business environment. This paper examines how courts and legislators should choose default arrangements in the corporate area to address new circumstances. We show that the interests of the shareholders of existing companies would not be...

Persistent link: https://www.econbiz.de/10012767857

A Dual Liquidity Model for Emerging Markets

Caballero, Ricardo J.; Krishnamurthy, Arvind - 2021

emerging economy, and those affecting borrowing from foreign lenders. This 'dual liquidity' model offers a parsimonious …

Persistent link: https://www.econbiz.de/10013224671

Ex Ante Costs of Violating Absolute Priority in Bankruptcy

Bebchuk, Lucian A. - 2021

A basic question for the design of bankruptcy law concerns whether value should be divided in accordance with absolute priority. Research done in the past decade has suggested that deviations from absolute priority have beneficial ex ante effects. In contrast, this paper shows that ex post...

Persistent link: https://www.econbiz.de/10013225121

Fiscal Policy and Financial Depth

Caballero, Ricardo J.; Krishnamurthy, Arvind - 2021

Most economists and observers place the lack of fiscal discipline at the core of the recent Argentine crisis. This begs the question of how countries like Belgium or Italy (pre-Maastricht) could run large fiscal deficits and accumulate debts far beyond those of Argentina, without experiencing...

Persistent link: https://www.econbiz.de/10013233772