Banks funding, leverage, and investment
Banks’ funding sources have changed significantly during the last two decades. The share of non-core funding (NCF) was high before the 2008 crisis but declined substantially after the crisis. We propose a general equilibrium model where NCF provides insurance against idiosyncratic risks faced by ban...
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| Veröffentlicht in: | Journal of financial economics 2021-07, Vol.141 (1), p.148-171 |
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| container_end_page | 171 |
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| container_start_page | 148 |
| container_title | Journal of financial economics |
| container_volume | 141 |
| creator | Barattieri, Alessandro Moretti, Laura Quadrini, Vincenzo |
| description | Banks’ funding sources have changed significantly during the last two decades. The share of non-core funding (NCF) was high before the 2008 crisis but declined substantially after the crisis. We propose a general equilibrium model where NCF provides insurance against idiosyncratic risks faced by banks. Insurance makes leverage and investment more attractive, but it also increases the vulnerability of the banking sector to crises. We show that learning about the likelihood of a crisis could have been important for generating the observed dynamics of NCF and leverage, which in turn affected the dynamics of the macro-economy. |
| doi_str_mv | 10.1016/j.jfineco.2020.06.022 |
| format | Article |
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| ispartof | Journal of financial economics, 2021-07, Vol.141 (1), p.148-171 |
| issn | 0304-405X 1879-2774 |
| language | eng |
| recordid | cdi_proquest_journals_2550530562 |
| source | Elsevier ScienceDirect Journals Complete |
| subjects | Bank crises Bank loans Business schools Central banks Crises Economic crisis Equilibrium Funding Insurance Investment Investment banking Leverage Leverage (Finance) Market funding Monetary policy |
| title | Banks funding, leverage, and investment |
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