Deciphering the Liquidity and Credit Crunch 2007-08
Citations
3,166 citations
2,158 citations
2,100 citations
Cites background from "Deciphering the Liquidity and Credi..."
...…and solvency of the banking sector.2 Unsecured commercial paper holders refused to roll over their debt, while repo lenders and trading counterparties required more collateral to back their loans and trades, all of which drained liquidity from the system (Brunnermeier, 2009; Gorton, 2009)....
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...Unsecured commercial paper holders refused to roll over their debt, while repo lenders and trading counterparties required more collateral to back their loans and trades, all of which drained liquidity from the system (Brunnermeier, 2009; Gorton, 2009)....
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...As noted in the introduction, banks had a difficult time rolling over their short-term debt (including repos) because of concerns about the solvency and liquidity of the banking system (Brunnermeier, 2009; Gorton, 2009)....
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1,900 citations
Cites background from "Deciphering the Liquidity and Credi..."
...Vt(s h t ; b h t ; dt) (Qt st !bt ): (11)...
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...Let ht be the Lagrangian multiplier for the incentive constraint (11) faced by bank of type h and t P...
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1,624 citations
References
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"Deciphering the Liquidity and Credi..." refers background in this paper
...…injecting additional equity since the proceeds of the investment are primarily going to existing debt-holders rather than the new equity holders (Myers 1977). incarnations of funding liquidity risk are only detrimental when the assets can be sold only at firesale prices—that is, when market…...
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...The debt-overhang problem arises when even informed financiers refrain from injecting additional equity since the proceeds of the investment are primarily going to existing debt-holders rather than the new equity holders ( Myers 1977 )....
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9,099 citations
"Deciphering the Liquidity and Credi..." refers background in this paper
...Starting with the trends leading up to the crisis, I explain how these events unfolded and how four different amplification mechanisms magnified losses in the mortgage market into large dislocations and turmoil in financial markets....
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