This paper interprets contagion effects as an increase in the volatility of aggregate shocks impinging on the domestic … banks borrow at a premium on world capital markets, and domestic producers (whose demand for credit results from working … capital needs) borrow at a premium from domestic banks. Higher volatility of producers’ productivity shocks increases both …

volatility of aggregate shocks impinging on the domestic economy. The implications of this approach are analyzed in a model with … two types of credit market imperfections: domestic banks borrow at a premium on world capital markets, and domestic … revenue lost in adverse states of nature. Higher volatility of producers' productivity shocks increases both financial spreads …

analysis considers a bank-only world where intermediaries compete in Cournot fashion and monitoring and state verification are …

analysis considers a bank-only world where intermediaries compete in Cournot fashion and monitoring and state verification are …