Since summer 2020, resident banks’ lending to non-financial corporations has been sluggish. In the wake of the impact of the health crisis, this has been against a backdrop of weak demand, a relatively steady supply of bank lending and an increase in financing obtained through issuance of debt...

This paper studies how interconnected plants distribute additional liquidity from banks through the supply chain. Using a spatially segmented bank branch expansion rule in India, we find that direct exposure to additional bank credit allows plants to hold less precautionary cash and increase...

Lending relationships are prevalent in credit markets and are a potentially important driver of bank value, but little is known about the quantitative significance of this source of intangible capital. To estimate the value of these relationships, we develop a model of the lender’s decision to...

We propose and test a new channel through which fiscal policy changes affect the supply of intermediated credit and the real economy. Lenders that have greater exposure to firms expected to repatriate a significant amount of foreign income as a result of a 2004-2005 U.S. tax holiday subsequently...

Financial covenants transfer control rights to lenders when borrowers’ metrics breach pre-set thresholds. Contingent control rights allow lenders to extract monetary concessions (e.g., fees and renegotiation) and behavioral concessions (e.g., CEO turnover and reduced investment, R&D, and...

This article presents a valuation model for generic cancellable structured notes. In general, there may be any number of cancellation legs in a product, and a cancellation leg will cancel a fixed number of other legs. The model can calculate the expectation of cancellation legs with respect to...

Since commodity derivatives typically trade by futures (a.k.a. forwards), there is a need to model the dynamics of the forward curve. This article presents a generic multi-factor model for pricing commodity derivatives. Our theoretical results show that commodity prices are driven by multiple...

European housing markets are at a turning point as the cost-of-living crisis has eroded real incomes and the surge in interest rates has made borrowers more vulnerable to financial distress. This paper aims to (i) shed light on the risks in European housing markets, (ii) quantify household...

Housing market developments are in the spotlight in Europe. Over-stretched valuations amid tightening financial conditions and a cost-of-living crisis have increased risks of a sustained downturn and exposed challenging trade-offs for macroprudential policy between ensuring financial system...