supply shock using micro-level data from a multinational bank. Borrowers with stronger lending relationships, higher non …-lending revenues, and those that pledge collateral, especially outside assets and real estate, experience less credit rationing …. Consistent with a tightening of financing constraints post shock, borrower composition shifts toward larger and less risky firms …

We investigate the channel through which fluctuations in the market liquidity of real-sector repo collateral cause … productive capital as repo collateral to fund the margin for their arbitrage positions. A tiny drop in the market liquidity of … movements and losses. This further reduces the collateral value of arbitrage portfolios and triggers more fire-sales in both …