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Leverage Restrictions in a Business Cycle Model
Christiano, Lawrence J. - 2013
We modify an otherwise standard medium-sized DSGE model, in order to study the macroeconomic effects of placing leverage restrictions on financial intermediaries. The financial intermediaries ('bankers') in the model must exert effort in order to earn high returns for their creditors. An agency...
Persistent link: https://www.econbiz.de/10013088686
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Financing the American Corporation : The Changing Menu of Financial Rela-Tionships
Calomiris, Charles W. - 2010
The history of the financing of the American corporation can be described along many dimensions. One dimension of that history that underlies various measures of historical change in corporate finance is the range of feasible relationships between corporations and intermediaries. Intermediaries...
Persistent link: https://www.econbiz.de/10012763786
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Equilibrium Corporate Finance and Intermediation
Bisin, Alberto - 2014
This paper analyzes a class of competitive economies with production, incomplete financial markets, and agency frictions. Firms take their production, financing, and contractual decisions so as to maximize their value under rational conjectures. We show that competitive equilibria exist and that...
Persistent link: https://www.econbiz.de/10013049698
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Banks as Secret Keepers
Dang, Tri Vi - 2014
Banks are optimally opaque institutions. They produce debt for use as a transaction medium (bank money), which requires that information about the backing assets - loans - not be revealed, so that bank money does not fluctuate in value, reducing the efficiency of trade. This need for opacity...
Persistent link: https://www.econbiz.de/10013051755
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Financing Innovation
Kerr, William - 2015
We review the recent literature on the financing of innovation, inclusive of large companies and new startups. This research strand has been very active over the past five years, generating important new findings, questioning some long-held beliefs, and creating its own puzzles. Our review...
Persistent link: https://www.econbiz.de/10013031824
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Intermediary Asset Pricing : New Evidence from Many Asset Classes
He, Zhiguo - 2016
We find that shocks to the equity capital ratio of financial intermediaries—Primary Dealer counterparties of the New York Federal Reserve—possess significant explanatory power for crosssectional variation in expected returns. This is true not only for commonly studied equity and government...
Persistent link: https://www.econbiz.de/10013000523
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Demand for Crash Insurance, Intermediary Constraints, and Risk Premia in Financial Markets
Chen, Hui - 2019
We propose a new measure of financial intermediary constraints based on how the intermediaries manage their tail risk exposures. Using data for the trading activities in the market of deep out-of-the-money S&P 500 put options, we identify periods when the variations in the net amount of trading...
Persistent link: https://www.econbiz.de/10012891794
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Vulnerable Banks
Greenwood, Robin M. - 2012
When a bank experiences a negative shock to its equity, one way to return to target leverage is to sell assets. If …
Persistent link: https://www.econbiz.de/10013097784
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Financial Frictions and Firm Dynamics
Bergin, Paul R. - 2014
asset pricing implications of the firm entry condition to explain the equity price response to a financial shock. The model … endogenous capital restructuring. Also, allowing the number of firms to fall after an adverse financial shock is a useful margin … of macroeconomic adjustment, reducing the overall impact of the shock on aggregate output. This is because the remaining …
Persistent link: https://www.econbiz.de/10013054047
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Uncertainty Shocks, Asset Supply and Pricing Over the Business Cycle
Bianchi, Francesco - 2014
This paper estimates a business cycle model with endogenous financial asset supply and ambiguity averse investors. Firms' shareholders choose not only production and investment, but also capital structure and payout policy subject to financial frictions. An increase in uncertainty about profits...
Persistent link: https://www.econbiz.de/10013054525