Bank capital, fire sales, and the social value of deposits
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DOI: 10.1007/s00199-019-01189-5
Abstract: We describe a model in which bank deposits yield liquidity services and therefore earn a lower rate of return than bank equity. In this sense, deposits are a cheaper source of funding than equity. The… read more here.
Keywords: bank; value; fire sales; bank capital ... See more keywords
Investment externalities in models of fire sales
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DOI: 10.1016/j.jmoneco.2021.07.005
Abstract: Abstract Two alternative models of fire sales that yield the same aggregate predictions have different normative implications. If fire sales result from marginal misallocation, a pecuniary externality leads to ex-ante overinvestment. If they result from… read more here.
Keywords: models fire; investment externalities; externalities models; fire sales ... See more keywords