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We develop a tractable dynamic model of credit markets in which lending standards and the quality of potential borrowers are endogenous. Competitive banks privately choose their lending standards: whether to pay a cost to screen out some unprofitable borrowers. Lending standards have negative...
Persistent link: https://www.econbiz.de/10012481463
We study a market for funding real investment in which valuation creates information on which adverse selection can occur. Unlike in previous models, higher amounts of valuation are associated with lower market prices and so greater returns to valuation, and this strategic complementarity in the...
Persistent link: https://www.econbiz.de/10010821952
We study a market for funding real investment in which valuation creates information on which adverse selection can occur. Unlike in previous models, higher amounts of valuation are associated with lower market prices and so greater returns to valuation, and this strategic complementarity in the...
Persistent link: https://www.econbiz.de/10013100990
Persistent link: https://www.econbiz.de/10011401278
Persistent link: https://www.econbiz.de/10009627378
Persistent link: https://www.econbiz.de/10012266020
We develop a tractable dynamic model of credit markets in which lending standards and the quality of potential borrowers are endogenous. Competitive banks privately choose their lending standards: whether to pay a cost to screen out some unprofitable borrowers. Lending standards have negative...
Persistent link: https://www.econbiz.de/10013405901
Persistent link: https://www.econbiz.de/10015046478
Following the textbook C-CAPM, the consumption risk of an asset is typically measured as the contemporaneous covariance of the marginal utility of consumption and the return on that asset. When measured this way, consumption risk is too small to explain the observed equity premium, is negatively...
Persistent link: https://www.econbiz.de/10012469152
This paper evaluates theoretical explanations for the propensity of households to increase spending in response to the arrival of predictable, lump-sum payments, using households in the Nielsen Consumer Panel who received 25 million in randomly-distributed stimulus payments. The pattern of...
Persistent link: https://www.econbiz.de/10012457299