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Credit Traps
Benmelech, Efraim; Bergman, Nittai K. - National Bureau of Economic Research (NBER) - 2010
This paper studies the limitations of monetary policy transmission within a credit channel frame- work. We show that …, under certain circumstances, the credit channel transmission mechanism fails in that liquidity injections by the central … bank into the banking sector are hoarded and not lent out. We use the term 'credit traps' to describe such situations and …
Persistent link: https://www.econbiz.de/10008622349
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Macroeconomic Effects of Corporate Default Crises: A Long-Term Perspective
Longstaff, Francis A.; Giesecke, Kay; Schaefer, Stephen; … - National Bureau of Economic Research (NBER) - 2012
theories that emphasize the unique role that banks and the credit and collateral channels play in amplifying macroeconomic …
Persistent link: https://www.econbiz.de/10009493261
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Implicit Guarantees and Risk Taking: Evidence from Money Market Funds
Kacperczyk, Marcin; Schnabl, Philipp - National Bureau of Economic Research (NBER) - 2011
A firm's termination generates bankruptcy costs. This may create incentives for a firm's owner to bail out a firm in bankruptcy and to curb the firm's risk taking outside bankruptcy. We analyze the role of such implicit guarantees in the context of financial institutions that sponsor money...
Persistent link: https://www.econbiz.de/10009251486
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Moral and Social Constraints to Strategic Default on Mortgages
Guiso, Luigi; Sapienza, Paola; Zingales, Luigi - National Bureau of Economic Research (NBER) - 2009
We use survey data to study American households' propensity to default when the value of their mortgage exceeds the value of their house even if they can afford to pay their mortgage (strategic default). We find that 26% of the existing defaults are strategic. We also find that no household...
Persistent link: https://www.econbiz.de/10005039683
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House Prices, Home Equity-Based Borrowing, and the U.S. Household Leverage Crisis
Mian, Atif; Sufi, Amir - National Bureau of Economic Research (NBER) - 2009
pay down high credit card balances, which suggests that borrowed funds may be used for real outlays (i.e., consumption or … home improvement). Home equity-based borrowing is stronger for younger households, households with low credit scores, and … households with high initial credit card utilization rates. Homeowners in high house price appreciation areas experience a …
Persistent link: https://www.econbiz.de/10005034331
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Fire Sales in Finance and Macroeconomics
Shleifer, Andrei; Vishny, Robert W. - National Bureau of Economic Research (NBER) - 2010
Fire sales are forced sales of assets in which high-valuation bidders are sidelined, typically due to debt overhang problems afflicting many specialist bidders simultaneously. We overview theoretical and empirical research on asset fire sales, which shows how they can arise, how they can lead to...
Persistent link: https://www.econbiz.de/10008776830
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Uncertainty as Commitment
Ordonez, Guillermo L.; Nosal, Jaromir - National Bureau of Economic Research (NBER) - 2013
Time-inconsistency of no-bailout policies can create incentives for banks to take excessive risks and generate endogenous crises when the government cannot commit. However, at the outbreak of financial problems, usually the government is uncertain about their nature, and hence it may delay...
Persistent link: https://www.econbiz.de/10010969240
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An Empirical Analysis of the Fed's Term Auction Facility
Benmelech, Efraim - National Bureau of Economic Research (NBER) - 2012
The U.S. Federal Reserve used the Term Auction Facility (TAF) to provide term funding to eligible depository institutions from December 2007 to March 2010. According to the Fed, the purpose of TAF was to inject term funds through a broader range of counterparties and against a broader range of...
Persistent link: https://www.econbiz.de/10010950874
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Unintended Consequences of LOLR Facilities: The Case of Illiquid Leverage
Acharya, Viral V.; Tuckman, Bruce - National Bureau of Economic Research (NBER) - 2013
While the direct effect of lender-of-last-resort (LOLR) facilities is to forestall the default of financial firms that lose funding liquidity, an indirect effect is to allow these firms to minimize deleveraging sales of illiquid assets. This unintended consequence of LOLR facilities manifests...
Persistent link: https://www.econbiz.de/10010951126
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Illiquidity and Interest Rate Policy
Diamond, Douglas W.; Rajan, Raghuram G. - National Bureau of Economic Research (NBER) - 2009
The cheapest way for banks to finance long term illiquid projects is typically to borrow short term from households. But when household needs for funds are high, interest rates will rise sharply, debtors will have to shut down illiquid projects, and in extremis, will face more damaging runs....
Persistent link: https://www.econbiz.de/10005087453