credit risk amid greater uncertainty. These adverse impacts of uncertainty on bank lending (both quantity and quality) are … implications for regulators and banks themselves: bank diversification can effectively act as a lending shock absorber in periods …The paper examines whether bank diversification in multiple dimensions can protect bank lending from uncertainty shocks …

novel financial precautionary motive, which compounds the classical motive associated with idiosyncratic income risk, as … borrowers accumulate risk-free bonds to hedge against them. Using a structural model, I estimate that this motive is an … decade despite consumption growth, solving a "post-Great Recession risk-free rate puzzle". It is also critical for the …

This paper analyzes the impact of US firms’ equity risk on bank lending standards and on the macroeconomy for two … an increase in firm risk on bank lending standards and the economy are amplified in a recession compared to an expansion. … groups: small and medium-large firms. The results indicate that a higher level of firm risk leads to a higher percentage of …

This paper studies the macroeconomic effects of shocks to idiosyncratic business risk in an economy with endogenously … incomplete markets. I develop a model in which firms face idiosyncratic risk and obtain insurance from intermediaries through … business outcomes leads to an endogenous reduction in risk sharing. This deterioration in risk sharing results from a general …

Most macroeconomic models fail to replicate the level, volatility, and countercyclicality of risk premia which has been …-varying risk of economic disaster. Both asset prices and macroeconomic aggregates respond to this time-varying risk. The model is … prices. An increase in the risk of disaster leads to a collapse of investment and a recession, with no current or future …

identify an asymmetric information problem: borrowers signal low financial risk to banks who are uncertain about borrower risk …

heightened risk aversion, leading to shifts in investment portfolio allocations and cross-border capital flows; a nd t he r eal e …