We study third-party loan guarantees in a model in which lenders can screen, learn loan quality over time and can sell loans before maturity when in need of liquidity. Loan guarantees improve market liquidity and reduce lending standards, with a positive overall welfare effect. Guarantees...

We study third-party loan guarantees in a model in which lenders can screen, learn loan quality over time and can sell loans before maturity when in need of liquidity. Loan guarantees improve market liquidity and reduce lending standards, with a positive overall welfare effect. Guarantees...

We study a competitive credit market in which lenders with partial knowledge of loan repayment use one of three decision criteria - maximization of expected utility, maximin, or minimax regret - to make lending decisions. Lenders allocate endowments between loans and a safe asset, while...

This paper investigates the effect of implicit government guarantees on equity returns by sorting financial institutions according to the systemic risk measures ∆CoVaR and the marginal expected shortfall, MES. In alignment with the risk-return trade off, riskier firms should earn higher...

Based on the ZHAW Managers Survey (7-13 April 2020) we evaluate firm reactions towards the COVID-19 crisis. We find that the Swiss economic lockdown measures successfully froze the economy, i.e., firms show very little pro-active reactions towards the crisis, but drastically decrease their...

We propose a unified framework to model the effects of implicit government guarantees on bond value. Implicit guarantees improve the value of highly rated corporate bonds through lowering the default probability of such bonds, serving the role of solvency protection. Additionally, guarantees...

The efficiency of federal lending guarantees depends on whether guarantees increase lending supply, or simply act as a subsidy to lenders. We use notches in the guarantee rate schedule for loans backed by the Small Business Administration to estimate the elasticity of bank lending volume to loan...

We analyze the removal of the credit-risk guarantees provided by the government-sponsored enterprises (GSEs) in a model with agents heterogeneous in income and house price risk. We find that wealth inequality increases, driven by higher mortgage spreads and housing rents. Housing holdings become...

The paper analyses the linkages from financial developments to public finances. It maps and discusses the transmission channels to fiscal variables. These channels include asset prices, financing conditions, balance sheets of banks, non-banks and central banks and international linkages. The...

The paper analyses the linkages from financial developments to public finances. It maps and discusses the transmission channels to fiscal variables. These channels include asset prices, financing conditions, balance sheets of banks, non-banks and central banks and international linkages. The...

The U.S. government guarantees a majority of residential mortgages, which is often justified as a means to promote homeownership. In this paper we use property-level data to estimate the effect of government mortgage guarantees on homeownership, by exploiting variation of the conforming loan...

The paper analyses the role of loan guarantee programmes following the COVID-19 outbreak in alleviating firm distress as well as their broader impacts on productivity via reallocation, relying on a simulation model and econometric estimations. The simulation exercise relies on a simple cash-flow...

The paper evaluates the impact of the guarantees provided by the Italian scheme Fondo di Garanzia on the access to credit for small and medium enterprises. The study exploits the mechanism that assigns the guarantees, which is based on a scoring system to assess eligibility. By using regression...

Lacking the authority to raise debt on their own, Chinese local governments set up financing vehicles for urban construction and investment to issue the so-called chengtou bonds. While these bonds are commonly understood to carry implicit government guarantee, the identity of the guarantor is...

Banks are intrinsically fragile because of their role as liquidity providers. This results in under-provision of liquidity. We analyze the e¤ect of government guarantees on the interconnection between banks' liquidity creation and likelihood of runs in a model of global games, where banks.and...

Guarantee banks backed by the state aim to close the gap in the financing of small and medium-sized enterprises or start-ups caused by lacking collateral or equity and high information asymmetry. The present study quantifies the economic and fiscal net benefits of guarantee banks in the new...

In China, loan guarantees play an important role in compensating for the deficiencies of the Chinese capital market. The provision of loan guarantees to third parties is a fundamental economic activity of listed Chinese companies. Many studies have examined the impact of guarantees on the value...

The ever increasing demand of the subscribers has put pressure on the capacity of wireless networks around the world. To utilize the scare resources, in the present paper we propose an optimal allocation scheme for an integrated wireless/cellular model with handoff priority and handoff guarantee...