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Equilibrium Corporate Finance and Intermediation
Bisin, Alberto - 2014
inefficient, may exhibit excessive aggregate risk. Financial decisions of the corporate sector are determined at equilibrium and … depend not only on the nature of financial frictions but also on the consumers' demand for risk. Financial intermediation and …
Persistent link: https://www.econbiz.de/10012458322
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Entrepreneurial Finance and Non-diversifiable Risk
Chen, Hui - 2009
. More risk-averse entrepreneurs default earlier, but also choose higher leverage, even though leverage makes his equity more … risky. Non-diversified entrepreneurs demand both systematic and idiosyncratic risk premium. Cash-out option and external … equity further improve diversification and raise the entrepreneur's valuation of the firm. Finally, entrepreneurial risk …
Persistent link: https://www.econbiz.de/10012463800
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Basel II : A Contracting Perspective
Kane, Edward J. - 2006
Financial safety nets are incomplete social contracts that assign responsibility to various economic sectors for preventing, detecting, and paying for potentially crippling losses at financial institutions. This paper uses the theories of incomplete contracts and sequential bargaining to...
Persistent link: https://www.econbiz.de/10012465955
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Taxes and Corporate Capital Structure in an Incomplete Market
Taggart, Robert A, Jr - 1980
This paper extends Merton Miller's 1977 analysis of corporate capital structure decisions to the incomplete capital markets case. As in Miller's model, aggregate demand for corporate leverage is curtailed as interest rates on taxable bonds rise. Unlike Miller's model, however, capital structure...
Persistent link: https://www.econbiz.de/10012478531
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Financial Entanglement : A Theory of Incomplete Integration, Leverage, Crashes, and Contagion
Gârleanu, Nicolae - 2013
We propose a unified model of limited market integration, asset-price determination, leveraging, and contagion. Investors and firms are located on a circle, and access to markets involves participation costs that increase with distance. Despite the ex-ante symmetry of investors, their strategies...
Persistent link: https://www.econbiz.de/10012459280
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Global Diversification, Growth and Welfare with Imperfectly Integrated Markets for Goods
Dumas, Bernard - 1999
In this article, we examine the effect of the imperfect mobility of goods on international risk sharing and, through … is not monotonic with respect to investors' risk aversion and the aggregate volatility of output growth. Our main result …
Persistent link: https://www.econbiz.de/10012471806
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Bankruptcy and Collateral in Debt Constrained Markets
Kehoe, Timothy J. - 2006
Typical models of bankruptcy and collateral rely on incomplete asset markets. In fact, bankruptcy and collateral add contingencies to asset markets. In some models, these contingencies can be used by consumers to achieve the same equilibrium allocations as in models with complete markets. In...
Persistent link: https://www.econbiz.de/10012466005
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Tariffs in an Economy with Incomplete Markets and Unemployment
Fernandez, Raquel - 1988
This paper examines the optimal labor contract in a small open economy with incomplete markets under international price uncertainty. The effect on employment, wages, and profits of different realizations of the state of nature is studied and agents' preferences concerning the implementation of...
Persistent link: https://www.econbiz.de/10012476356
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Imperfect Financial Markets and Shareholder Incentives in Partial and General Equilibrium
Albagli, Elias - 2017
aggregation for corporate risk-taking and investment. Market imperfections cause controlling shareholders to invest too much in …
Persistent link: https://www.econbiz.de/10012455262
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Incomplete Markets and Aggregate Demand
Werning, Iván - 2015
I study aggregate consumption dynamics under incomplete markets, focusing on the relationship between consumption and the path for interest rates. I first provide a general aggregation result under extreme illiquidity (no borrowing and no outside assets), deriving a generalized Euler relation...
Persistent link: https://www.econbiz.de/10012457220