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Multiple Lending, Credit Lines and Financial Contagion

Cappelletti, Giuseppe - 2017

Multiple lending has been widely investigated from both an empirical and a theoretical perspective. Nevertheless, the implications of multiple lending for the stability of the banking system still need to be understood. By lending to a common set of borrowers, banks are interconnected and then...

Persistent link: https://www.econbiz.de/10012950803

Risk Aversion and Bank Loan Pricing

Camba-Méndez, Gonzalo; Mongelli, Francesco Paolo - 2021

How much of the heterogeneity in bank loan pricing is explained by disparities in banks’ attitude towards risk? The answer to this question is not simple because there are only very weak proxies for gauging the degree of a bank’s risk aversion. We handle this constraint by means of a novel...

Persistent link: https://www.econbiz.de/10013243821

Bank Lines of Credit as Contingent Liquidity : A Study of Covenant Violations and Their Implications

Acharya, Viral V. - 2014

We study how the consequences of violations of covenants associated with bank lines of credit to firms vary with the … financial health of lenders. Following a violation banks restrict usage of lines of credit by raising spreads, shortening … during the recent crisis. Banks in worse financial health are more likely to restrict access to credit lines following a …

Persistent link: https://www.econbiz.de/10013051172

Loan Guarantees, Bank Underwriting Policies and Financial Fragility

Carletti, Elena; Leonello, Agnese; Marquez, Robert - 2023

Loan guarantees represent a form of government intervention to support bank lending. However, their use raises concerns as to their effect on bank risk-taking incentives. In a model of •nancial fragility that incorporates bank capital and a bank incentive problem, we show that loan guarantees...

Persistent link: https://www.econbiz.de/10014257509

Liquidity Hoarding and Interbank Market Spreads : The Role of Counterparty Risk

Heider, Florian - 2009

We study the functioning and possible breakdown of the interbank market in the presence of counterparty risk. We allow banks to have private information about the risk of their assets. We show how banks' asset risk affects funding liquidity in the interbank market. Several interbank market...

Persistent link: https://www.econbiz.de/10013153429

Market Pricing of Credit Rating Signals

Grothe, Magdalena - 2014

This paper contributes new evidence on market pricing of rating changes. We examine the relation between spreads and ratings for a very large and comprehensive sample of corporate bonds, which allows us to test for country- and industry-specific effects, as well as to explore the differences...

Persistent link: https://www.econbiz.de/10013061797

The Role of Counterparty Risk and Asymmetric Information in the Interbank Market

Cappelletti, Giuseppe - 2017

We study the effect of counterparty risk on the ability of Italian banks to access the foreign unsecured interbank market during the sovereign debt crisis in the second half of 2011. With the onset of the crisis, interest rates in the Italian interbank market soared and foreign lending decreased...

Persistent link: https://www.econbiz.de/10012962465

Government Loan Guarantees, Market Liquidity, and Lending Standards

Ahnert, Toni; Kuncl, Martin - 2022

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...

Persistent link: https://www.econbiz.de/10013403073

Liquidity hoarding and interbank market spreads: the role of counterparty risk

Heider, Florian; Hoerova, Marie; Holthausen, Cornelia - 2009

We study the functioning and possible breakdown of the interbank market in the presence of counterparty risk. We allow banks to have private information about the risk of their assets. We show how banks’ asset risk affects funding liquidity in the interbank market. Several interbank market...

Persistent link: https://www.econbiz.de/10011605172

The Effect of Macroprudential Policies on Credit Developments in Europe 1995-2017

Budnik, Katarzyna - 2020

The paper inspects the credit impact of policy instruments that are commonly applied to contain systemic risk. It …, borrower-based measures, caps on long-term maturity and exchange rate mismatch, and asset-based capital requirements on credit …

Persistent link: https://www.econbiz.de/10012824519