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Larger Crises, Slower Recoveries : The Asymmetric Effects of Financial Frictions

Research Department, Federal Reserve Bank of Minneapolis - 2009

It is well known that movements in lending rates are asymmetric; they rise quickly and sharply, but fall slowly and gradually. Not known is the fact that the asymmetry is stronger the less developed a country's financial system is. This new fact is here documented and explained in a model with an...

Persistent link: https://www.econbiz.de/10013157630

Prominent numbers, indices and ratios in exchange rate determination and financial crashes : in Economists' models, in the field and in the laboratory

Pope, Robin; Selten, Reinhard; Kube, Sebastian; Hagen, … - 2009

laboratory. Third, nominalist heuristics are incompatible with expected utility theory which excludes the evaluation stage, and … are also incompatible with prospect theory which assumes that, while the evaluation stage can involve systematic mistakes … model and identify what is a mistake, and b) decision makers can maximise. However, contrary to prospect theory, in the …

Persistent link: https://www.econbiz.de/10003867227

Discharge of residual debt : do private and institutional lenders differ? ; conference paper

Kirchkamp, Oliver; Prömpers, Henning - 2013

With the help of lab experiments we study the impact of discharging insolvent debtors of their residual debt. We investigate the impact of different participation rules and the impact of different types of lenders. We find that higher participation rates encourage risk taking behaviour of...

Persistent link: https://www.econbiz.de/10010341120

Lessons from the European financial crisis

Pagano, Marco - 2014

This paper distils three lessons for bank regulation from the experience of the 2009-12 euro-area financial crisis. First, it highlights the key role that sovereign debt exposures of banks have played in the feedback loop between bank and fiscal distress, and inquires how the regulation of...

Persistent link: https://www.econbiz.de/10010424982

The Economics of Privacy

Acquisti, Alessandro; Taylor, Curtis R.; Wagman, Liad - 2021

themes that connect diverse insights from the literature. First, characterizing a single unifying economic theory of privacy …

Persistent link: https://www.econbiz.de/10013322294

ESG Integration under Asymmetric Information

Chang, Dongkyu; Rhee, Keeyoung; Yoon, Aaron - 2023

We present a model of ESG integration where borrowers can deviate from ESG promises ex-post. Borrowers are incentivized to pursue ESG projects only when lenders can charge a high borrowing rate, which decreases the borrowers’ private benefit from pursuing financial returns. In the presence of...

Persistent link: https://www.econbiz.de/10014254730

Market Discipline by Bank Creditors During the 2008-2010 Crisis

Bennett, Rosalind L. - 2014

This paper shows that the liability classes most likely to exhibit evidence of market discipline during the recent financial crisis were uninsured depositors, insured depositors, and general creditors. We evaluate the FDIC's expectations about losses to creditors at banks that failed between...

Persistent link: https://www.econbiz.de/10013048959

Diversification and Financial Stability

Tasca, Paolo - 2012

The recent credit crisis of 2007/08 has raised a debate about the so-called knife-edge properties of financial markets. The paper contributes to the debate shedding light on the controversial relation between risk-diversification and financial stability. We model a financial network where assets...

Persistent link: https://www.econbiz.de/10013114499

Bank Competition, Diversification and Financial Stability

Amidu, Mohammed - 2011

Does competition improve bank insolvency risk through a revenue diversification channel and what are the drivers that underlie diversification? Using a panel dataset of 978 banks, H-statistic and the Lerner index as measures of the degree of competition in the banking sector, and employing three...

Persistent link: https://www.econbiz.de/10013122331

Why Prudential Regulation Will Fail to Prevent Financial Crises : A Legal Approach

Prates, Marcelo - 2014

In this paper, I suggest that the regulation of the financial system, especially if the aim is to prevent financial crises, should be focused on dealing with the consequences of the crises, not on trying to avoid their causes, although it may seem counterintuitive at first sight. Contrary to the...

Persistent link: https://www.econbiz.de/10013061343