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Reaching for Yield in the Bond Market
Becker, Bo - 2013
market. We show that insurance companies, the largest institutional holders of corporate bonds, reach for yield in choosing … their investments. Consistent with lower rated bonds bearing higher capital requirement, insurance firms' prefer to hold … higher rated bonds. However, conditional on credit ratings, insurance portfolios are systematically biased toward higher …
Persistent link: https://www.econbiz.de/10013084730
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Owning, Using and Renting : Some Simple Economics of the "Sharing Economy"
Horton, John J. - 2016
New Internet-based markets enable consumer/owners to rent out their durable goods when not using them. Such markets are modeled to determine ownership, rental rates, quantities, and surplus generated. Both the short run, before consumers can revise their ownership decisions, and the long run, in...
Persistent link: https://www.econbiz.de/10012997898
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Blockchain Disruption and Smart Contracts
Cong, Lin William - 2018
Blockchain technology provides decentralized consensus and potentially enlarges the contracting space using smart contracts with tamper-proofness and algorithmic executions. Meanwhile, generating decentralized consensus entails distributing information which necessarily alters the informational...
Persistent link: https://www.econbiz.de/10012925288
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On Fintech and Financial Inclusion
Philippon, Thomas - 2020
The cost of financial intermediation has declined in recent years thanks to technological progress and increased competition. I document this fact and I analyze two features of new financial technologies that have stirred controversy: returns to scale, and the use of big data and machine...
Persistent link: https://www.econbiz.de/10012831538
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Credit Risk and Disaster Risk
Gourio, Francois - 2011
depression, this paper embeds a trade-off theory of capital structure into a real business cycle model with a small, time …
Persistent link: https://www.econbiz.de/10013125570
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Endogenous Liquidity and Defaultable Bonds
He, Zhiguo - 2012
This paper studies the interaction between fundamental and liquidity for defaultable corporate bonds that are traded in an over-the-counter secondary market with search frictions. Bargaining with dealers determines a bond's endogenous liquidity, which depends on both the firm fundamental and the...
Persistent link: https://www.econbiz.de/10013100361
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Systematic Risk, Debt Maturity, and the Term Structure of Credit Spreads
Chen, Hui - 2012
We build a dynamic capital structure model to study the link between firms' systematic risk exposures and their time-varying debt maturity choices, as well as its implications for the term structure of credit spreads. Compared to short-term debt, long-term debt helps reduce rollover risks, but...
Persistent link: https://www.econbiz.de/10013100984
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Which Financial Frictions? Parsing the Evidence from the Financial Crisis of 2007-9
Adrian, Tobias - 2012
The financial crisis of 2007-9 has sparked keen interest in models of financial frictions and their impact on macro activity. Most models share the feature that borrowers suffer a contraction in the quantity of credit. However, the evidence suggests that although bank lending to firms declines...
Persistent link: https://www.econbiz.de/10013101282
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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 markets in such an environment. Corporate credit is provided by either a bond market or risk-averse banks. Restructuring of insolvent firms happens out of court if in-court...
Persistent link: https://www.econbiz.de/10013076562
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Liquidity Effects in the Bond Market
Jovanovic, Boyan - 2010
Our paper reports the following two findings: 1) In monthly data, bond purchases by the Fed raise bond prices and reduce bond yields. The residual bond-supply to traders is not fully predictable, and this supply-risk adds between 10 and 40 basis points to the standard deviation of the real...
Persistent link: https://www.econbiz.de/10012763097