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Wieland, Johannes F. - 2016

We propose a novel mechanism, "financial dampening," whereby loan retrenchment by banks attenuates the effectiveness of monetary policy. The theory unifies an endogenous supply of illiquid local loans and risk-sharing among subsidiaries of bank holding companies (BHCs). We derive an IV-strategy...

Persistent link: https://www.econbiz.de/10012456534

The Cyclical Response of Advertising Refutes Counter-Cyclical Profit Margins in Favor of Product-Market Frictions

Hall, Robert E. - 2012

According to the standard model, advertising is remarkably sensitive to profit margins. Firms advertise to stimulate …-and-matching map a decline in wages to higher unemployment. But a rise in profit margins should expand advertising by a lot. Really a … lot. Advertising should be highly countercyclical. Instead, it is somewhat procyclical. The ratio of advertising spending …

Persistent link: https://www.econbiz.de/10012460290

Risk Management, Capital Budgeting and Capital Structure Policy for Insurers and Reinsurers

Froot, Kenneth A. - 2003

This paper builds on Froot and Stein (1998) in developing a framework for analyzing the risk allocation, capital budgeting, and capital structure decisions facing insurers and reinsurers. The model incorporates three key features: i) value-maximizing insurers and reinsurers face product-market...

Persistent link: https://www.econbiz.de/10012468510

Assessing, Managing, and Financing Extreme Events : Dealing with Terrorism

Kunreuther, Howard - 2003

This paper discusses new challenges we face with terrorism as a catastrophic risk by focusing on risk assessment, risk management as well as risk financing issues. The special characteristics of terrorism compared with major natural hazards call for the development of public-private...

Persistent link: https://www.econbiz.de/10012468515

Competitive Risk Sharing Contracts with One-Sided Commitment

Krueger, Dirk - 2003

This paper analyzes dynamic equilibrium risk sharing contracts between profit-maximizing intermediaries and a large pool of ex-ante identical agents that face idiosyncratic income uncertainty that makes them heterogeneous ex-post. In any given period, after having observed her income, the agent...

Persistent link: https://www.econbiz.de/10012468559

Managing Bank Liquidity Risk : How Deposit-Loan Synergies Vary with Market Conditions

Gatev, Evan - 2006

Liquidity risk in banking has been attributed to transactions deposits and their potential to spark runs or panics. We show instead that transactions deposits help banks hedge liquidity risk from unused loan commitments. Bank stock-return volatility increases with unused commitments, but the...

Persistent link: https://www.econbiz.de/10012466434

The Risks of Financial Institutions

Carey, Mark - 2005

Over the last twenty years, the consensus view of systemic risk in the financial system that emerged in response to the banking crises of the 1930s and before has lost much of its relevance. This view held that the main systemic problem is runs on solvent banks leading to bank panics. But...

Persistent link: https://www.econbiz.de/10012467237

Systemic Risk and the Great Depression

Das, Sanjiv R. - 2018

We employ a unique hand-collected dataset and a novel methodology to examine systemic risk before and after the largest U.S. banking crisis of the 20th century. Our systemic risk measure captures both the credit risk of an individual bank as well as a bank's position in the network. We construct...

Persistent link: https://www.econbiz.de/10012481052

Financial Crises and Economic Activity

Cecchetti, Stephen G. - 2009

We study the output costs of 40 systemic banking crises since 1980. Most, but not all, crises in our sample coincide with a sharp contraction in output from which it took several years to recover. Our main findings are as follows. First, the current financial crisis is unlike any others in terms...

Persistent link: https://www.econbiz.de/10012463271

Financial Fragility and the Great Depression

Cooper, Russell - 1997

We analyze a financial collapse, such as the one which occurred during the Great Depression, from the perspective of a monetary model with multiple equilibria. The economy we consider contains financial fragility due to increasing returns to scale in the intermediation process. Intermediaries...

Persistent link: https://www.econbiz.de/10012472720

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