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Risk Bearing, Implicit Financial Services and Specialization in the Financial Industry
Wang, J. Christina - 2009
This paper makes three points regarding the proper measurement of the output of financial intermediaries. Two of them concern the measurement of nominal financial output, especially banking output. First, we show that, to impute the nominal value of implicitly priced financial output, it is...
Persistent link: https://www.econbiz.de/10012764900
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Outside and Inside Liquidity
Bolton, Patrick - 2010
We consider a model of liquidity demand arising from a possible maturity mismatch between asset revenues and consumption. This liquidity demand can be met with either cash reserves (inside liquidity) or via asset sales for cash (outside liquidity). The question we address is, what determines the...
Persistent link: https://www.econbiz.de/10012757585
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The Credit Ratings Game
Bolton, Patrick - 2010
interest of Credit Rating Agencies (CRAs). We model both the CRA conflict of understating credit risk to attract more business … (conditional on the same equilibrium CRA rating policy) than having a monopoly CRA, in terms of both total ex-ante surplus and … payments for rating services (before CRAs propose a rating to the issuer) combined with mandatory disclosure of any rating …
Persistent link: https://www.econbiz.de/10012757875
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Liquidity Production in 21st Century Banking
Strahan, Philip E. - 2010
I consider banks' role in providing funding liquidity (the ability to raise cash on demand) and market liquidity (the ability to trade assets at low cost), and how these roles have evolved. Traditional banks made illiquid loans funded with liquid deposits, thus producing funding liquidity on the...
Persistent link: https://www.econbiz.de/10012759533
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Financing Development : The Role of Information Costs
Greenwood, Jeremy - 2010
How does technological progress in financial intermediation affect the economy? To address this question a costly-state verification framework is embedded into a standard growth model. In particular, financial intermediaries can invest resources to monitor the returns earned by firms. The...
Persistent link: https://www.econbiz.de/10012760093
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Trade Credit, Financial Intermediary Development and Industry Growth
Fisman, Raymond J. - 2010
Recent work suggests that financial development is important for economic growth, since financial markets more effectively allocate capital to firms with high value projects. For firms in poorly developed financial markets, implicit borrowing in the form of trade credit may provide an...
Persistent link: https://www.econbiz.de/10012763014
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Financial Intermediation and the Great Depression : A Multiple Equilibrium Interpretation
Cooper, Russell - 2010
This paper explores the behavior of the U.S. economy during the interwar period from the perspective of a model in which the existence of non-convexities in the intermediation process gives rise to a multiplicity of equilibria. The resulting indeterminancy is resolved through a sunspot process...
Persistent link: https://www.econbiz.de/10012763745
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Financing the American Corporation : The Changing Menu of Financial Rela-Tionships
Calomiris, Charles W. - 2010
The history of the financing of the American corporation can be described along many dimensions. One dimension of that history that underlies various measures of historical change in corporate finance is the range of feasible relationships between corporations and intermediaries. Intermediaries...
Persistent link: https://www.econbiz.de/10012763786
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Emerging Market Business Groups, Foreign Investors, and Corporate Governance
Khanna, Tarun - 2010
We examine the interaction between three kinds of concentrated owners commonly found in an emerging market: family-run business groups, domestic financial institutions, and foreign financial institutions. Using data from India in the early 1990s, we find evidence that domestic international...
Persistent link: https://www.econbiz.de/10012763811
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A Theory of Liquidity and Regulation of Financial Intermediation
Farhi, Emmanuel - 2009
This paper studies a mechanism design model of financial intermediation. There are two informational frictions: agents receive unobservable shocks and can participate in markets by engaging in trades unobservable to intermediaries. Without regulations, intermediaries provide no risk sharing...
Persistent link: https://www.econbiz.de/10012767119