Tong and Wei (2020) study the impact of unconventional monetary interventions on credit markets during the 2008 global financial crisis. They find that stock prices increase on intervention days, particularly for firms operating in sectors perceived to be more reliant on external funding....

We study a model where a capital provider learns from the price of a firm’s security in deciding how much capital to provide for new investment. This feedback effect from the financial market to the investment decision gives rise to trading frenzies, where speculators all wish to trade like...