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We empirically identify the lending standards applied by banks to small and medium firms over the cycle. We exploit an institutional feature of the Italian credit market that generates a sharp discontinuity in the allocation of comparable firms into credit risk categories. Using loan-level data,...
Persistent link: https://www.econbiz.de/10012936690
It is widely acknowledged that the recent generation of DSGE models failed to incorporate many of the liquidity and financial accelerator mechanisms revealed in the global financial crisis that began in 2007. This paper complements the papers presented at the 2009 BIS annual conference focused...
Persistent link: https://www.econbiz.de/10013094782
This paper proposes a tractable way to incorporate lending standards ("credit qualification thresholds") into macro models of financial frictions. Banks can reject borrowers whose risk is above an endogenous threshold at which no lending rate sufficiently compensates banks for the borrowers’...
Persistent link: https://www.econbiz.de/10013315376
We construct and calibrate a monetary model of corporate finance with endogenous formation of lending relationships. The equilibrium features money demands by firms that depend on their access to credit and a pecking order of financing means. We describe the mechanism through which monetary...
Persistent link: https://www.econbiz.de/10014352242
What are the effects of changing bank lending conditions in a model in which borrowers have endogenously-persistent credit relationships with lenders? This paper answers this question in a simple Two-Agent New Keynesian (TANK) setup. Fluctuations in collateral requirements, termed collateral...
Persistent link: https://www.econbiz.de/10015413885
This paper presents a model in which firms have endogenously-persistent lending relationships with banks which compete both on interest rates and collateral requirements. The economy features an endogenously-evolving lending standard which is subject to an exogenous shock. A shock to bank...
Persistent link: https://www.econbiz.de/10015413889
We study how signaling affects equilibrium outcomes and welfare in markets with adverse selection. Using data from an online credit market, we estimate a model of borrowers and lenders where low reserve interest rates can signal low default risk. Comparing a market with and without signaling...
Persistent link: https://www.econbiz.de/10013036169
تعاني سوق التمويل في المملكة من تفاوت حاد في المعلومات بين أطراف عقد التمويل، مما يؤدي إلى قلة حجم المبادلات مقارنة بالوضع المثالي المتمثل في اكتمال المعلومات...
Persistent link: https://www.econbiz.de/10013080957
Persistent link: https://www.econbiz.de/10013261042
This paper examines the conditions for credit volume or borrower rationing in a competitive credit market in which the project characteristics are private information of the borrowers. There can only be credit volume rationing if the higher-risk credit applicants have a higher return in the...
Persistent link: https://www.econbiz.de/10008697924