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Leverage and Asset Bubbles : Averting Armageddon with Chapter 11?
Miller, Marcus H. - 2010
An iconic model with high leverage and overvalued collateral assets is used to illustrate the amplification mechanism driving asset prices to 'overshoot' equilibrium when an asset bubble bursts--threatening widespread insolvency and what Richard Koo calls a 'balance sheet recession'. Besides...
Persistent link: https://www.econbiz.de/10013145248
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Rollover Risk and Market Freezes
Acharya, Viral V. - 2010
The crisis of 2007-09 has been characterized by a sudden freeze in the market for short-term, secured borrowing. We present a model that can explain a sudden collapse in the amount that can be borrowed against finitely-lived assets with little credit risk. The borrowing in this model takes the...
Persistent link: https://www.econbiz.de/10013148660
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Liquidity, Institutional Quality and the Composition of International Equity Flows
Goldstein, Itay - 2010
economy-wide sales of external assets. Consistent with our theory, we find that the predicted liquidity shock has a strong … liquidity shocks, the liquidation price they can get will be lower when buyers know that they have more information on … expectation of future liquidity problems export relatively more FPI than FDI, and (2) this effect strengthens as the source …
Persistent link: https://www.econbiz.de/10013148094
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International Liquidity Management : Sterilization Policy in Illiquid Financial Markets
Caballero, Ricardo J.; Krishnamurthy, Arvind - 2021
the international liquidity management aspect of sterilization over the traditional monetary one, a re-focus that seems … liquidity management issues more generally …
Persistent link: https://www.econbiz.de/10013245510
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Investment-Cash Flow Sensitivities are Not Valid Measures of Financing Constraints
Kaplan, Steven N. - 2001
Kaplan and Zingales [1997] provide both theoretical arguments and empirical evidence that investment-cash flow sensitivities are not good indicators of financing constraints. Fazzari, Hubbard and Petersen [1999] criticize those findings. In this note, we explain how the Fazzari et al. [1999]...
Persistent link: https://www.econbiz.de/10012788101
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Leverage, Moral Hazard and Liquidity
Acharya, Viral V. - 2010
drying up of liquidity. Financial firms raise short-term debt in order to finance asset purchases. When asset fundamentals … worsen, debt induces firms to risk-shift; this limits their funding liquidity and their ability to roll over debt. Firms may … de-lever by selling assets to better-capitalized firms. Thus the market liquidity of assets depends on the severity of …
Persistent link: https://www.econbiz.de/10013146273
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Dynamic Debt Maturity
He, Zhiguo - 2016
A firm chooses its debt maturity structure and default timing dynamically, both without commitment. Via the fraction of newly issued short-term bonds, equity holders control the maturity structure, which affects their endogenous default decision. A shortening equilibrium with accelerated default...
Persistent link: https://www.econbiz.de/10013000527
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Cyclicality, Performance Measurement, and Cash Flow Liquidity in Private Equity
Robinson, David T. - 2014
liquidity providers (sinks) when market valuations are high (low). Venture cash flows and performance are considerably more …
Persistent link: https://www.econbiz.de/10013067387
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Investor Information, Long-Run Risk, and the Term Structure of Equity
Croce, Mariano (Max) Massimiliano - 2012
We study the role of information in asset pricing models with long-run cash flow risk. When investors can distinguish short- from long-run consumption risks (full information), the model generates a sizable equity risk premium only if the equity term structure slopes up, contrary to the data. In...
Persistent link: https://www.econbiz.de/10012755422
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The Degree of Judicial Enforcement and Credit Markets : Evidence from Japanese Household Panel Data
Horioka, Charles Yuji - 2010
. Contrary to the predictions of the existing theory, we find that better judicial enforcement increases the probability of being …
Persistent link: https://www.econbiz.de/10013149297