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Leverage and Asset Bubbles : Averting Armageddon with Chapter 11?
Miller, Marcus - 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'
Persistent link: https://www.econbiz.de/10012462797
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Illiquidity and Interest Rate Policy
Diamond, Douglas W. - 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/10012463452
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An Empirical Study of the Credit Market with Unobserved Consumer Typers
Gan, Li - 2008
This paper proposes an econometric model to identify unobserved consumer types in the credit market. Consumers choose different amounts of loan because of differences in their time or risk preferences (types). Thus, the unconditional probability of default is modeled using a mixture density...
Persistent link: https://www.econbiz.de/10012464774
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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
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Liquidity Flows and Fragility of Business Enterprises
Haan, Wouter den - 1999
liquidity. When liquidity is low, relationships are subject to breakups that lead to loss of joint surplus. Liquidity outflows …
Persistent link: https://www.econbiz.de/10012471744
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Stressed not Frozen : The Fed Funds Market in the Financial Crisis
Afonso, Gara - 2010
, we do not find that worse performing banks start hoarding liquidity and indiscriminately reduce their lending …
Persistent link: https://www.econbiz.de/10012462844
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Do the Benefits of Fixed Exchange Rates Outweigh Their Costs? The Franc Zone in Africa
Devarajan, Shantayanan - 1991
We develop a simple formal framework to clarify the trade-offs involved in the choice between a fixed and flexible exchange-rate system. We then apply the framework to the CFA Zone countries in Africa, which have maintained a fixed parity with the French Franc since independence. Thanks to the...
Persistent link: https://www.econbiz.de/10012475278
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Using Bankruptcy to Reduce Foreclosures : Does Strip-down of Mortgages Affect the Supply of Mortgage Credit?
Li, Wenli - 2014
We assess the credit market impact of allowing mortgage "strip-down"--that is, reducing the principal of underwater residential mortgages to the current market value of the property for homeowners in Chapter 13 bankruptcy. Our identification is provided by a series of U.S. Circuit Court of...
Persistent link: https://www.econbiz.de/10012458712
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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/10012463019
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How Debt Markets have Malfunctioned in the Crisis
Krishnamurthy, Arvind - 2009
effects can arise, so that less liquidity and a higher cost for finance can reinforce each other in a contagious spiral. I … document the remarkable rise in the premium that investors placed on liquidity during the crisis. Next, I show how these issues …
Persistent link: https://www.econbiz.de/10012463107