in the event of default in the context of a competitive credit market characterized either by moral hazard (MH) or by … the dominant source of asymmetric information. Under MH, conditional on the level of exemption, the cost of credit is … higher for borrowers who are requested to post collateral. Moreover, conditional on posting collateral, the cost of credit …

times of high uncertainty, firms reduce their credit demand due to delayed investments or a deterioration in their credit … worthiness, while at the same time banks are more exposed to negative shocks to their balance sheet and thereby reduce credit … supply. To isolate the uncertainty effect from the credit supply effect, we employ matched bank-firm loan data covering all …

) model featuring deposit issuance via bank credit and endogenous default. We argue that the official policy rate and the … fourth, that money-financed fiscal expansion is effective in raising output and inflation, and accompanied with lower credit …