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Overborrowing, Financial Crises and 'Macro-Prudential' Taxes

Bianchi, Javier - 2010

An equilibrium model of financial crises driven by Irving Fisher's financial amplification mechanism features a pecuniary externality, because private agents do not internalize how the price of assets used for collateral respond to collective borrowing decisions, particularly when binding...

Persistent link: https://www.econbiz.de/10013142089

Should Derivatives Be Privileged in Bankruptcy?

Bolton, Patrick - 2011

Derivative contracts, swaps, and repos enjoy "super-senior" status in bankruptcy: they are exempt from the automatic stay on debt and collateral collection that applies to virtually all other claims. We propose a simple corporate finance model to assess the effect of this exemption on firms'...

Persistent link: https://www.econbiz.de/10013118249

A Theory of Banks, Bonds, and the Distribution of Firm Size

Russ, Katheryn Niles - 2009

We draw on stylized facts from the finance literature to build a model where altering the relative costs of bank and bond financing changes the entire distribution of firm size, with implications for the aggregate capital stock, output, and welfare. Reducing transactions costs in the bond market...

Persistent link: https://www.econbiz.de/10013155119

Did Bank Distress Stifle Innovation During the Great Depression?

Nanda, Ramana - 2014

We find a negative relationship between bank distress and the level, quality and trajectory of firm-level innovation during the Great Depression, particularly for R&D firms operating in capital intensive industries. However, we also show that because a sufficient number of R&D intensive firms...

Persistent link: https://www.econbiz.de/10013048617

Bank Ties and Bond Market Access : Evidence on Investment-Cash Flow Sensitivity in Japan

McGuire, Patrick M. - 2003

The banking literature has established that banks can alleviate information asymmetries between lenders and borrowers, while the Q literature has used cash flow sensitivity analysis to test whether financing constraints hinder investment. This paper investigates whether bank ties in Japan were...

Persistent link: https://www.econbiz.de/10012786618

Banks, Short Term Debt and Financial Crises : Theory, Policy Implications and Applications

Diamond, Douglas W. - 2010

Short-term borrowing has often been blamed for precipitating financial crises. We argue that while the empirical association between a financial institution's, or country's, short-term borrowing and susceptibility to crises may, in fact, exist, the direction of causality is often precisely the...

Persistent link: https://www.econbiz.de/10012763305

Systemic Credit Freezes in Financial Lending Networks

Acemoglu, Daron; Ozdaglar, Asuman E.; Siderius, James; … - 2022

This paper develops a network model of interbank lending, in which banks decide to extend credit to their potential borrowers. Borrowers are subject to shocks that may force them to default on their loans. In contrast to much of the previous literature on financial networks, we focus on how...

Persistent link: https://www.econbiz.de/10013298205

Dollar Funding and the Lending Behavior of Global Banks

Ivashina, Victoria - 2012

lending. We test the model in the context of the Eurozone sovereign crisis, which escalated in the second half of 2011 and … dollar funding, there were significant violations of euro-dollar CIP. Moreover, dollar lending by Eurozone banks fell …

Persistent link: https://www.econbiz.de/10013098138

Bank Finance Versus Bond Finance

De Fiore, Fiorella - 2011

We present a dynamic general equilibrium model with agency costs where: i) firms are heterogeneous in the risk of default; ii) they can choose to raise finance through bank loans or corporate bonds; and iii) banks are more efficient than the market in resolving informational problems. The model...

Persistent link: https://www.econbiz.de/10013126201

Non-Cointegration and Econometric Evaluation of Models of Regional Shift and Share

Brown, Scott James; Engle, Robert F.; Coulson, N. Edward - 2021

This paper tests for cointegration between regional output of an industry and national output of the same industry. An … equilibrium economic theory is presented to argue for the plausibility of cointegration, however, regional economic forecasting … using the shift and share framework often acts as if cointegration does not exist. Data analysis on broad industrial sectors …

Persistent link: https://www.econbiz.de/10013221307