Essays In The Theory Of Financial Intermediation

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The Theory Of Financial Intermediation

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Author : Bert Scholtens
language : en
Publisher:
Release Date : 2003

The Theory Of Financial Intermediation written by Bert Scholtens and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003 with Finance categories.

Essays On The Theory Of Financial Intermediation

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Author : Michel de Lange
language : en
Publisher:
Release Date : 1992

Essays On The Theory Of Financial Intermediation written by Michel de Lange and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1992 with Credit categories.

Essays In The Theory Of Financial Intermediation

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Author : Nathalie Rossiensky
language : en
Publisher:
Release Date : 1998

Essays In The Theory Of Financial Intermediation written by Nathalie Rossiensky and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1998 with categories.

Essays On Financial Intermediation

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Author : Igor Salitskiy
language : en
Publisher:
Release Date : 2014

Essays On Financial Intermediation written by Igor Salitskiy and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.

This dissertation consists of three studies. In the first study I This paper extends the costly state verification model from Townsend (1979) to a dynamic and hierarchical setting with an investor, a financial intermediary, and an entrepreneur. Such a hierarchy is natural in a setting where the intermediary has special monitoring skills. This setting yields a theory of seniority and dynamic control: it explains why investors are usually given the highest priority on projects' assets, financial intermediaries have middle priority and entrepreneurs have the lowest priority; it also explains why more cash flow and control rights are allocated to financial intermediaries if a project's performance is bad and to entrepreneurs if it is good. I show that the optimal contracts can be replicated with debt and equity. If the project requires a series of investments until it can be sold to outsiders, the entrepreneur sells preferred stock (a combination of debt and equity) each time additional financing is needed. If the project generates a series of positive payoffs, the entrepreneur sells a combination of short-term and long-term debt. In the second study I I study optimal government interventions during asset fire sales by banks. Fire sales happen when a large portion of banks receive liquidity shocks. This depletes bank balance sheets directly and indirectly because these assets are used as collateral. The government can respond by buying distressed assets or buying stock from banks. Stock purchases do not deprive banks of collateral, but may have a lower effect on asset prices. The optimal policy depends on the elasticity of asset prices to asset supply and the amount of assets held by banks. Calibration to the recent financial crisis is provided. In the third study conducted with Attila Ambrus and Eric Chaney we use ransom prices and time to ransom for over 10,000 captives rescued from two Barbary strongholds to investigate the empirical relevance of dynamic bargaining models with one-sided asymmetric information in ransoming settings. We observe both multiple negotiations that were ex ante similar from the uninformed party's (seller's) point of view, and information that only the buyer knew. Through reduced-form analysis, we test some common qualitative predictions of dynamic bargaining models. We also structurally estimate the model in Cramton (1991) to compare negotiations in different Barbary strongholds. Our estimates suggest that the historical bargaining institutions were remarkably efficient, despite the presence of substantial asymmetric information.

Essays On Banking And Financial Intermediation

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Author : Yuteng Cheng (Ph.D.)
language : en
Publisher:
Release Date : 2022

Essays On Banking And Financial Intermediation written by Yuteng Cheng (Ph.D.) and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022 with categories.

Chapter 1 uses a mix of theory and data to study the unintended consequences of mandatory retention rules in securitization. The Dodd-Frank Act and the EU Securitization Regulation both impose a 5% mandatory retention requirement in securitization to motivate financial intermediaries to screen and monitor their borrowers more carefully. To better understand the impact of the policy, this chapter studies two related research questions. First, can mandatory retention have unintended consequences? Second, is the current level of retention optimal? To answer those questions, I propose a novel trade-off model in which retention strengthens monitoring but may also encourage banks to shift risk. I go on to provide empirical evidence supporting this unintended consequence: in the data, banks shifted toward riskier portfolios after the implementation of the retention rules embedded in Dodd-Frank. Furthermore, the model provides clear testable predictions about policy and corresponding consequences. I show in the data that stricter retention rules caused banks to monitor and shift risk simultaneously. According to the model prediction, such a simultaneous increase can only occur when the retention level is above optimal, which suggests that the current rate of 5% in the US is too high. Chapter 2Chapter 2 studies the source of fragility of OTC-natured interbank markets. Most research on the fragility of interbank markets -in the sense of multiplicity of equilibria driven by adverse selection-relies on a competitive market structure. By contrast, this chapter accounts for the OTC market nature and the market power of some players. Under adverse selection alone, markets are not fragile; that is, the equilibrium is unique. However, when adverse selection is combined with moral hazard on the borrowers' side, multiple equilibria arise again, and the bad equilibrium exhibits troubled banks gambling for resurrection. An interest rate floor eliminates the bad equilibrium. More generally, policies to reduce fragility should address moral hazard rather than adverse selection. Chapter 3Chapter 3 studies the contracting differences between corporate loans that are sold in the secondary market and that are securitized in the CLO market. With secondary loan sales and CLO markets being the two markets for corporate loan commoditization, empirical studies find that banks add additional restrictive covenants to loans sold and looser covenants to loans securitized. Why is it so? This chapter builds a theoretical model to explain such contracting differences in these two markets. The key mechanism is that the bank alleviates the borrowers' moral hazard problem via public monitoring and charges higher interest rates due to the relaxing of incentives provided. Those high interest rates facilitate loan sales because the information problem embedded in loan sales is lessened. In contrast, adverse selection is less severe in securitization since the bank retains the information-sensitive tranche.

Essays On Banking And Financial Intermediation

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Author : Yuteng Cheng (Ph.D.)
language : en
Publisher:
Release Date : 2022

Essays On Banking And Financial Intermediation written by Yuteng Cheng (Ph.D.) and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022 with categories.

Chapter 1 uses a mix of theory and data to study the unintended consequences of mandatory retention rules in securitization. The Dodd-Frank Act and the EU Securitization Regulation both impose a 5% mandatory retention requirement in securitization to motivate financial intermediaries to screen and monitor their borrowers more carefully. To better understand the impact of the policy, this chapter studies two related research questions. First, can mandatory retention have unintended consequences? Second, is the current level of retention optimal? To answer those questions, I propose a novel trade-off model in which retention strengthens monitoring but may also encourage banks to shift risk. I go on to provide empirical evidence supporting this unintended consequence: in the data, banks shifted toward riskier portfolios after the implementation of the retention rules embedded in Dodd-Frank. Furthermore, the model provides clear testable predictions about policy and corresponding consequences. I show in the data that stricter retention rules caused banks to monitor and shift risk simultaneously. According to the model prediction, such a simultaneous increase can only occur when the retention level is above optimal, which suggests that the current rate of 5% in the US is too high. Chapter 2Chapter 2 studies the source of fragility of OTC-natured interbank markets. Most research on the fragility of interbank markets -in the sense of multiplicity of equilibria driven by adverse selection-relies on a competitive market structure. By contrast, this chapter accounts for the OTC market nature and the market power of some players. Under adverse selection alone, markets are not fragile; that is, the equilibrium is unique. However, when adverse selection is combined with moral hazard on the borrowers' side, multiple equilibria arise again, and the bad equilibrium exhibits troubled banks gambling for resurrection. An interest rate floor eliminates the bad equilibrium. More generally, policies to reduce fragility should address moral hazard rather than adverse selection. Chapter 3Chapter 3 studies the contracting differences between corporate loans that are sold in the secondary market and that are securitized in the CLO market. With secondary loan sales and CLO markets being the two markets for corporate loan commoditization, empirical studies find that banks add additional restrictive covenants to loans sold and looser covenants to loans securitized. Why is it so? This chapter builds a theoretical model to explain such contracting differences in these two markets. The key mechanism is that the bank alleviates the borrowers' moral hazard problem via public monitoring and charges higher interest rates due to the relaxing of incentives provided. Those high interest rates facilitate loan sales because the information problem embedded in loan sales is lessened. In contrast, adverse selection is less severe in securitization since the bank retains the information-sensitive tranche.

Essays On Financial Intermediation

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Author : Gabriel Asaftei
language : en
Publisher:
Release Date : 2004

Essays On Financial Intermediation written by Gabriel Asaftei and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with Banks and banking categories.

Essays In Financial Intermediation

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Author : Una Savic
language : en
Publisher:
Release Date : 2017

Essays In Financial Intermediation written by Una Savic and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.

Essays On Macro And Financial Economics

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Author : Linyi Cao
language : en
Publisher:
Release Date : 2020

Essays On Macro And Financial Economics written by Linyi Cao and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020 with Electronic dissertations categories.

Nurturing Young Public Firms over Real Business Cycles. In this paper, I develop a theory of financial intermediation in a general equilibrium environment, to study the interactions between households, financial intermediation, and entrepreneurs over real business cycles. In the model, the financial intermediary, who resembles real-life private equity (PE) groups and investment bankers, works as a nurturer of young public firms. It performs screening and sorting on entrepreneurs, then allocates resources to them, borrowed from the households. However, the effort intensity in screening decreases when the financial intermediary is flooded by resources, so do the average quality of financial services and the commission rate, which predict the countercyclicality of those variables. This countercyclicality of efficiency in the financial sector promises a dampening effect on economic volatility. I use the U. S. initial public offering (IPO) data, as well as selected PE data to document that the commission rate is indeed countercyclical. Its correlation with the cyclical component of total output is around -0. 21. I calibrate the model to the U. S. financial market and conduct several counterfactual exercises. I find that a 20% drop in the financial intermediary's cost of effort dampens the total output volatility by 0. 24% and the household consumption volatility by 0. 53%. While a binding commission rate cap amplifies the volatility by 0. 36% and 0. 54% respectively. Antitrust Policy in a Globalized Economy. Antitrust policies have been relaxed and the number of mergers and acquisitions (M&A) has risen rapidly since the 1980s in the United States. This paper provides a framework to evaluate the cost and benefits of antitrust policy in a global context. M&A reallocate resources from small to large and typically more productive firms, while also increasing their monopoly power. An optimal antitrust policy seeks a balance between the positive productivity effect and the negative markup effect. In a globalized economy, increasing productivity fully accrues to domestic firms/workers while a higher markup only partially hurts domestic consumers. The weakening antitrust policy since the 1980s is thus an optimal response to the increasing globalization in the same period. We present a dynamic general equilibrium model of M&A and show that welfare, measured as aggregate consumption/production in stationary equilibrium, is a hump-shaped function of the antitrust policy parameter in the model. We are extending the model to an open economy, and aim to formalize the intuition that openness to trade demands a more lenient antitrust policy and to explore its quantitative implications for aggregate markup and welfare. A Model of Technology Diffusion. Many new technologies, instead of being adopted simultaneously by all producers in the same area or industry, display a long and lagged diffusion process, with an S-shaped adoption curve. This even applies to technologies that were later proven to improve productivity significantly. We construct and test a model for explaining this observation. In the model, agents who are heterogeneous in beliefs choose their optimal stopping/adopting time, while they are learning from the output of others. As the population of agents who are experimenting with the new technology grows up, the learning process accelerates. Part of the incentives for them to wait is to free-ride on a larger experimenting group in the future. Our model can explain various technology diffusion data, such as the hybrid corn adoption in the U. S. , or the adoption of the 12 industrial innovations.

Four Essays On Financial Intermediation

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Author : Stephen Donald Williamson
language : en
Publisher: Ann Arbor, Mich. : University Microfilms International
Release Date : 1984

Four Essays On Financial Intermediation written by Stephen Donald Williamson and has been published by Ann Arbor, Mich. : University Microfilms International this book supported file pdf, txt, epub, kindle and other format this book has been release on 1984 with Financial institutions categories.