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competition. I show that with asymmetric costs, bank market shares are always inversely related to their efficiency, and that bank …
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The growth and deepening of financial markets entailed the expectation that the bank lending channel of monetary policy transmission would lose its importance. The paper explains why, on the contrary, the banking sector has become a major locus of origination and amplification of macro-financial...
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Market distress can be the catalyst of a deleveraging wave, as in the 2007/08 financial crisis. This paper demonstrates … how market distress and deleveraging can fuel each other in the presence of adverse selection problems in asset markets … to a market breakdown. I find that adverse selection creates both an "ex-ante" inefficiency because it distorts agents …
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