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Credit Shocks and Aggregate Fluctuations in an Economy with Production Heterogeneity

Khan, Aubhik - 2011

We study the cyclical implications of credit market imperfections in a calibrated dynamic, stochastic general equilibrium model wherein firms face persistent shocks to aggregate and individual productivity. In our model economy, optimal capital reallocation is distorted by two frictions:...

Persistent link: https://www.econbiz.de/10013121072

Collateral Pricing

Benmelech, Efraim - 2008

We examine how collateral affects the cost of debt capital. Theories based on borrower moral hazard and limited pledgeable income predict that collateral increases the availability of credit and reduces its price. Testing these theories is complicated by the very selection problem which they...

Persistent link: https://www.econbiz.de/10012772363

Discrimination in the Small Business Credit Market

Blanchflower, David G. - 2015

This paper uses data from the 1993 National Survey of Small Business Finances to determine the extent to which minority-owned small businesses face constraints in the credit market beyond those faced by white-owned small businesses. First, we present qualitative evidence indicating that black-...

Persistent link: https://www.econbiz.de/10012750807

Unnatural Selection : Perverse Incentives and the Misallocation of Credit in Japan

Peek, Joe - 2003

This study examines the misallocation of credit in Japan associated with the perverse incentives of banks to provide additional credit to the weakest firms. Firms are far more likely to receive additional credit if they are in poor financial condition, and these firms continue to perform poorly...

Persistent link: https://www.econbiz.de/10012786620

Some Simple Economics of Crowdfunding

Agrawal, Ajay - 2014

, the recent rise of crowdfunding - raising capital from many people through an online platform - which offers little … initially startling. On the eve of launching equity-based crowdfunding, a new market for early-stage finance in the U.S., we … transaction costs, reputation, and market design, can explain the rise of non-equity crowdfunding and offer a framework for …

Persistent link: https://www.econbiz.de/10013063674

Credit-Market Sentiment and the Business Cycle

Lopez-Salido, David - 2016

Using U.S. data from 1929 to 2013, we show that elevated credit-market sentiment in year t – 2 is associated with a decline in economic activity in years t and t + 1. Underlying this result is the existence of predictable mean reversion in credit-market conditions. That is, when our sentiment...

Persistent link: https://www.econbiz.de/10013001213

Inequality in Human Capital and Endogenous Credit Constraints

Hai, Rong - 2017

This paper investigates the determinants of inequality in human capital with an emphasis on the role of the credit constraints. We develop and estimate a model in which individuals face uninsured human capital risks and invest in education, acquire work experience, accumulate assets and smooth...

Persistent link: https://www.econbiz.de/10012966600

The Loan Covenant Channel : How Bank Health Transmits to the Real Economy

Chodorow-Reich, Gabriel - 2017

We document the importance of covenant violations in transmitting bank health to non-financial firms using a new supervisory data set of bank loans. Roughly one-third of loans in our data breach a covenant during the 2008-09 period, providing lenders the opportunity to force a renegotiation of...

Persistent link: https://www.econbiz.de/10012946490

The Mortgage Rate Conundrum

Justiniano, Alejandro - 2017

We document the emergence of a disconnect between mortgage and Treasury interest rates in the summer of 2003. Following the end of the Federal Reserve expansionary cycle in June 2003, mortgage rates failed to rise according to their historical relationship with Treasury yields, leading to...

Persistent link: https://www.econbiz.de/10012948080

The Tradeoffs in Leaning Against the Wind

Gourio, François - 2017

Credit booms sometimes lead to financial crises which are accompanied with severe and persistent economic slumps. Does this imply that monetary policy should “lean against the wind” and counteract excess credit growth, even at the cost of higher output and inflation volatility? We study this...

Persistent link: https://www.econbiz.de/10012950050