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When is There a Strong Transfer Risk from the Sovereigns to the Corporates? Property Rights Gaps and CDS Spreads
Bai, Jennie - 2014
When a sovereign faces the risk of debt default, it may be tempted to expropriate the private sector. This may be one reason for why international investment in private companies has to take into account the sovereign risk. But the likelihood of a transfer from the sovereign risk to corporate...
Persistent link: https://www.econbiz.de/10013054883
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How the Subprime Crisis Went Global : Evidence from Bank Credit Default Swap Spreads
Eichengreen, Barry - 2010
How did the Subprime Crisis, a problem in a small corner of U.S. financial markets, affect the entire global banking system? To shed light on this question we use principal components analysis to identify common factors in the movement of banks' credit default swap spreads. We find that fortunes...
Persistent link: https://www.econbiz.de/10012757524
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A Dynamic Model of Subprime Mortgage Default : Estimation and Policy Implications
Bajari, Patrick - 2013
The increase in defaults in the subprime mortgage market is widely held to be one of the causes behind the recent financial turmoil. Key issues of policy concern include quantifying the role of various factors, such as home price declines and loosened underwriting standards, in the recent...
Persistent link: https://www.econbiz.de/10013085919
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A Pyrrhic Victory? - Bank Bailouts and Sovereign Credit Risk
Acharya, Viral V. - 2011
We show that financial sector bailouts and sovereign credit risk are intimately linked. A bailout benefits the economy by ameliorating the under-investment problem of the financial sector. However, increasing taxation of the non-financial sector to fund the bailout may be inefficient since it...
Persistent link: https://www.econbiz.de/10013123694
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Credit Default Swaps and the Credit Crisis
Stulz, René M. - 2010
Many observers have argued that credit default swaps contributed significantly to the credit crisis. Of particular concern to these observers are that credit default swaps trade in the largely unregulated over-the-counter market as bilateral contracts involving counterparty risk and that they...
Persistent link: https://www.econbiz.de/10013150831
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Aig in Hindsight
McDonald, Robert L. - 2015
pushed AIG to the brink of bankruptcy. AIG used securities lending to transform insurance company assets into residential …
Persistent link: https://www.econbiz.de/10013024150
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One Reason Countries Pay Their Debts : Renegotiation and International Trade
Rose, Andrew Kenan - 2021
associated with a subsequent decline in international trade either because creditors want to deter default by debtors, or because … economically and statistically significant decline in bilateral trade between a debtor and its creditors. The decline in bilateral …
Persistent link: https://www.econbiz.de/10013240938
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Debt Restructuring
Friedman, Benjamin M. - 2021
What difference does it make, and for whom, whether the nonperforming debts of emerging market borrowers are restructured? This paper begins by positing a set of counterfactual conditions under which restructuring would not matter, and then shows how several ways in which the actual world of...
Persistent link: https://www.econbiz.de/10013248231
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Renegotiation in Debt Chains
Glode, Vincent; Opp, Christian - 2021
We develop a tractable model of strategic debt renegotiation in which businesses are sequentially interconnected through their liabilities. This financing structure, which we refer to as a debt chain, gives rise to externalities as a lender’s willingness to provide concessions to his...
Persistent link: https://www.econbiz.de/10013242917
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Insolvency Resolution and the Missing High Yield Bond Markets
Becker, Bo - 2013
In many countries, bankruptcy is associated with low recovery by creditors. We develop a model of corporate credit … insolvent firms happens out of court if in-court bankruptcy is inefficient, giving banks an advantage over bondholders. Riskier … borrowers will use bank loans anywhere, but also bonds when bankruptcy is efficient. The model matches empirical debt mix …
Persistent link: https://www.econbiz.de/10013076562