This paper develops a network model of interbank lending, in which banks decide to extend credit to their potential … literature on financial networks, we focus on how anticipation of future defaults may result in ex ante “credit freezes,” whereby … banks refuse to extend credit to one another. We first characterize the terms of the interbank contracts and the patterns of …

This paper proposes a methodology for measuring credit booms and uses it to identify credit booms in emerging and … regularities of credit booms in macroeconomic aggregates and micro-level data. Macro data show a systematic relationship between … credit booms and economic expansions, rising asset prices, real appreciations, widening external deficits and managed …

A growing literature shows that credit indicators forecast aggregate real outcomes. While researchers have proposed … simple, frictionless, model explains empirical findings commonly attributed to credit cycles. Our key assumption is that … firms have heterogeneous exposures to underlying economy-wide shocks. This leads to endogenous dispersion in credit quality …

This paper develops a model of a self-fulfilling credit market freeze and uses it to study alternative governmental … ability of other operating firms to obtain financing. In such an economy, an inefficient credit market freeze may arise in … getting an economy out of an inefficient credit market freeze. In particular, we study the effectiveness of interest rate cuts …

Standard economic theory says that unsecured, high-interest, short-term debt — such as borrowing via credit cards and … income shock of unemployment. Instead, individuals smooth their credit card debt and overdrafts by adjusting consumption. We … first use detailed longitudinal information on debit and credit card transactions, account balances, and credit lines from a …

The market for corporate credit is characterized by significant seasonal variation, both in interest rates and the …

-constrained investors to take excessive risks. Ignored are unconstrained investors speculating on higher prices during credit booms. To … a bank/brokerage-credit-fueled stock-market bubble. The direct effect is a 25 cent increase in a stock's market …

Credit booms are not rare and usually precede financial crises. However, some end in a crisis (bad booms) while others … do not (good booms). We document that credit booms start with an increase in productivity, which subsequently falls much … faster during bad booms. We develop a model in which crises happen when credit markets change to an information regime with …

Financial intermediaries borrow in order to lend. When credit is increasing rapidly, the traditional deposit funding …

monetary policy. The theory unifies an endogenous supply of illiquid local loans and risk-sharing among subsidiaries of bank …