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We construct a novel U.S. data set that matches bank holding company credit default swap (CDS) positions to detailed U ….S. credit registry data containing both loan and corporate bond holdings to study the effects of banks' CDS use on corporate … credit quality. Banks may use CDS to mitigate agency frictions and not renegotiate loans with solvent but illiquid borrowers …
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We study third-party loan guarantees in a model in which lenders can screen, learn loan quality over time and can sell loans before maturity when in need of liquidity. Loan guarantees improve market liquidity and reduce lending standards, with a positive overall welfare effect. Guarantees...
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