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Benmelech, Efraim - 2010

Do bankrupt firms impose negative externalities on their non-bankrupt competitors? We propose and analyze a collateral channel in which a firm's bankruptcy reduces collateral values of other industry participants, thereby increasing the cost of external debt finance industry wide. To identify...

Persistent link: https://www.econbiz.de/10012462944

Interpreting the Unconventional U.S. Monetary Policy of 2007-09

Reis, Ricardo - 2010

compares the Federal Reserve's actions with the literature on optimal policy in a liquidity trap. The theory suggests that, to … securities markets can restore liquidity with fewer government funds than extending credit to the originators of loans …

Persistent link: https://www.econbiz.de/10012462989

Regulatory Free Cash Flow and the High Cost of Insurance Company Failures

Hall, Brian J. - 1998

Why is the cost of resolving insurance company failures so high? Evidence in this paper suggests that the state insurance regulatory bodies in charge of the liquidation process turn over an average of only 33 cents for each $1.00 of pre-insolvency assets to the guaranty funds (the state agencies...

Persistent link: https://www.econbiz.de/10012471974

The Moral Hazard of Insuring the Insurers

Bohn, James G. - 1997

State guaranty funds are quasi-governmental agencies that provide insurance to policyholders against the risk of insurance company failure. But insurance provided by guaranty funds, like all insurance, creates moral hazard problems, especially for companies that are insolvent or near-insolvent....

Persistent link: https://www.econbiz.de/10012472917

The Myth of the Patient Japanese : Corporate Myopia and Financial Distress in Japan and the US

Hall, Brian J. - 1996

It is widely believed that the stock-market oriented US financial system forces corporate managers to behave myopically relative to their Japanese counterparts, who operate in a bank-based system. We hypothesize that if US firms are more myopic than Japanese firms, then episodes of financial...

Persistent link: https://www.econbiz.de/10012473010

Property and Casualty Solvency Funds as a Tax and Social Insurance System

Bohn, James - 1995

When a Property and Casualty (P&C) insurance company becomes insolvent, solvent insurance companies are forced to pay assessments (a form of taxation) to state guarantee funds ('solvency funds') in order to protect the policyholders of the failed companies. We produce estimates of the costs to...

Persistent link: https://www.econbiz.de/10012473671

Credit Market Freezes

Benmelech, Efraim - 2017

Credit market freezes in which debt issuance declines dramatically and market liquidity evaporates are typically … bonds declined, and secondary credit markets became highly illiquid. In this paper we analyze liquidity in bond markets … during financial crises and compare two main theories of liquidity in markets: (1) asymmetric information and adverse …

Persistent link: https://www.econbiz.de/10012455170

The Real Effects of Liquidity During the Financial Crisis : Evidence from Automobiles

Benmelech, Efraim - 2016

Illiquidity in short-term credit markets during the financial crisis might have severely curtailed the supply of non-bank consumer credit. Using a new data set linking every car sold in the United States to the credit supplier involved in each transaction, we find that the collapse of the...

Persistent link: https://www.econbiz.de/10012456527

Different Types of Central Bank Insolvency and the Central Role of Seignorage

Reis, Ricardo - 2015

A central bank is insolvent if its plans imply a Ponzi scheme on reserves so the price level becomes infinity. If the central bank enjoys fiscal support, in the form of a dividend rule that pays out net income every period, including when it is negative, it can never become insolvent...

Persistent link: https://www.econbiz.de/10012457441

The Agglomeration of Bankruptcy

Benmelech, Efraim - 2014

This paper identifies a new channel through which bankrupt firms impose negative externalities on non-bankrupt peers. The bankruptcy and liquidation of a retail chain weakens the economies of agglomeration in any given local area, reducing the attractiveness of retail centers for remaining...

Persistent link: https://www.econbiz.de/10012458412