Open AccessPosted Content
Financial Repression in the European Sovereign Debt Crisis
Bo Becker,Victoria Ivashina +1 more
TLDR
This article showed that increased domestic government bond holdings generated a crowding out of corporate lending, which negatively impacts private capital formation. But they found that loan supply was depressed by these domestic sovereign bonds only during the crisis period (2010-11).Abstract:
At the end of 2013, the share of government debt held by the domestic banking sectors of Eurozone countries was more than twice the amount held in 2007. We show that increased domestic government bond holdings generated a crowding out of corporate lending. We find that loan supply was depressed by these domestic sovereign bonds only during the crisis period (2010-11). The pattern also holds across firms with different relationship banks within a given countries. These findings suggest that sovereign bond holdings negatively impact private capital formation. We show that direct government ownership, as well as government influence through banks' boards of directors, are among the channels used to influence banks.read more
Citations
More filters
Journal ArticleDOI
Public Debt Overhangs: Advanced- Economy Episodes Since 1800
TL;DR: In this article, the authors identify 26 episodes of public debt overhang, 20 of which lasted more than a decade, and the long duration of these episodes implies that the cumulative shortfall in output from such overhang is potentially massive, and these growth-reducing effects of high public debt are apparently not transmitted exclusively through high real interest.
Journal ArticleDOI
Real Effects of the Sovereign Debt Crisis in Europe: Evidence from Syndicated Loans
TL;DR: This paper explored the impact of the credit crunch that followed the European debt crisis on the corporate policies of European firms and showed that banks' exposures to impaired sovereign debt and the risk-shifting behavior of under-capitalized banks contributed significantly to the severity of the crisis.
Journal ArticleDOI
Exporting Sovereign Stress: Evidence from Syndicated Bank Lending during the Euro Area Sovereign Debt Crisis
TL;DR: The authors showed that after the start of the euro area sovereign debt crisis, lending by non-GIIPS European banks with sizeable holdings of GIIPS sovereign bonds declined relative to nonexposed banks.
Journal ArticleDOI
Who Borrows from the Lender of Last Resort
TL;DR: In this paper, the authors document a strong divergence among banks' take-up of LOLR assistance during the financial crisis in the euro area, as banks which borrowed heavily also used increasingly risky collateral.
Journal ArticleDOI
The Real Effects of Credit Ratings: The Sovereign Ceiling Channel
Heitor Almeida,Heitor Almeida,Igor Cunha,Miguel A. Ferreira,Miguel A. Ferreira,Felipe Restrepo +5 more
TL;DR: In this article, the authors show that sovereign debt impairments can have a significant impact on financial markets and real economies through a credit ratings channel and identify these effects by exploiting exogenous variation on corporate ratings due to rating agencies' sovereign ceiling policies that require firms' ratings to remain at or below the sovereign rating of their country of domicile.
References
More filters
Journal ArticleDOI
Determinants of corporate borrowing
TL;DR: In this article, the authors predict that corporate borrowing is inversely related to the proportion of market value accounted for by real options and rationalize other aspects of corporate borrowing behavior, such as the practice of matching maturities of assets and debt liabilities.
Journal ArticleDOI
Financial Intermediation and Delegated Monitoring
TL;DR: In this paper, the authors developed a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders, and presented a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary.
Journal ArticleDOI
Are Government Bonds Net Wealth
TL;DR: In this article, the authors consider the effects of different types of intergenerational transfer schemes on the stock of public debt in the context of an overlapping-generations model and show that finite lives will not be relevant to the capitalization of future tax liabilities so long as current generations are connected to future generations by a chain of operative inter-generational transfers.
Book
Money and capital in economic development
TL;DR: In this paper, the authors present a theory of economic development very different from the "stages of growth" hypothesis or strategies emphasizing foreign aid, trade, or regional association, focusing on the use of domestic capital markets to stimulate economic performance.
BookDOI
This Time Is Different: Eight Centuries of Financial Folly
Carmen Reinhart,Kenneth Rogoff +1 more
TL;DR: This Time Is Different as mentioned in this paper presents a comprehensive look at the varieties of financial crises, and guides us through eight astonishing centuries of government defaults, banking panics, and inflationary spikes.