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bank failures. The gains from acquiring assets at fire-sale prices make it attractive for banks to hold liquid assets. The … resulting choice of bank liquidity is counter-cyclical, inefficiently low during economic booms but excessively high during … ex post, they affect bank liquidity in subtle ways: Liquidity support to failed banks or unconditional support to …
Persistent link: https://www.econbiz.de/10013148772
channel, one bank's capital policy affects the equity value and risk of default of other banks. In a model where such … externalities are strong, bank capital takes on the attribute of a public good, where the private equilibrium features excessive … implications of the model with observed bank behavior during the crisis of 2007-09 …
Persistent link: https://www.econbiz.de/10012983304
Persistent link: https://www.econbiz.de/10003045019
Banks' liquidity is a crucial determinant of the adversity of banking crises. In this paper, we consider the effect of fire sales and entry during crises on banks' ex-ante choice of liquid asset holdings. We consider a setting with limited pledgeability of risky cash flows relative to safe ones...
Persistent link: https://www.econbiz.de/10013150020
In a financial system where balance sheets are continuously marked to market, asset price changes show up immediately in changes in net worth, and elicit responses from financial intermediaries, who adjust the size of their balance sheets. We document evidence that marked to market leverage is...
Persistent link: https://www.econbiz.de/10014216388
Since the conference version of this report in February 2011, bank stress tests have been almost continuously in the …
Persistent link: https://www.econbiz.de/10013091615
suggests that although bank lending contracted during the crisis, bond financing actually increased to make up much of the gap …
Persistent link: https://www.econbiz.de/10013113163
suggests that although bank lending contracted during the crisis, bond financing actually increased to make up much of the gap …
Persistent link: https://www.econbiz.de/10009411381
in the demand for intraday credit and, ultimately, a disruption of payments. Additionally, we find that when a bank is … identified as vulnerable to failure and other banks choose to cancel payments to that bank, there are systemic repercussions for …
Persistent link: https://www.econbiz.de/10003781793
Securitization was meant to disperse credit risk to those who were better able to bear it. In practice, securitization appears to have concentrated the risks in the financial intermediary sector itself. This paper outlines an accounting framework for the financial system for assessing the impact...
Persistent link: https://www.econbiz.de/10013094784