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Author: Mr.Vadim Khramov
Publisher: International Monetary Fund
ISBN: 1475502877
Category : Business & Economics
Languages : en
Pages : 28
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Book Description
This paper uses the financial crisis of 2008 as a natural experiment to demonstrate that when measuring investment-cash flow sensitivity, the value of a firm's assets that can be used as collateral should be taken into account. Using panel data on U.S. firms from 1990 to 2011, it was found that the share of physical capital in assets has a strong influence on investment-cash flow sensitivity, which decreased substantially after the crisis when banks changed their expectations about the value of assets on firms' balance sheets. This paper deepens our understanding of firms' investment behavior.
Author: Mr.Vadim Khramov
Publisher: International Monetary Fund
ISBN: 1475502877
Category : Business & Economics
Languages : en
Pages : 28
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Book Description
This paper uses the financial crisis of 2008 as a natural experiment to demonstrate that when measuring investment-cash flow sensitivity, the value of a firm's assets that can be used as collateral should be taken into account. Using panel data on U.S. firms from 1990 to 2011, it was found that the share of physical capital in assets has a strong influence on investment-cash flow sensitivity, which decreased substantially after the crisis when banks changed their expectations about the value of assets on firms' balance sheets. This paper deepens our understanding of firms' investment behavior.
Author: Pierre-Richard Agénor
Publisher: World Bank Publications
ISBN:
Category : Ciclo de negocios
Languages : en
Pages : 36
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Book Description
Author: The Asymmetric Effects of Financial Frictions
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Economic variables are known to move asymmetrically over the business cycle: quickly and sharply during crises, but slowly and gradually during recoveries. Not known is the fact that this asymmetry is stronger in countries with less-developed financial systems. This new fact is documented using cross-country data on loan interest rates, investment, and output. The fact is then explained using a learning model with endogenous flows of information about economic conditions. Asymmetry is shown to be stronger in less-developed countries because these countries have greater financial frictions, which are captured in the model by higher monitoring and bankruptcy costs. These greater frictions magnify the crisis reactions of lending rates and economic activity to shocks and then delay their recovery by restricting the generation of information after the crisis. Empirical evidence and a quantitative exploration of the model show that this explanation is consistent with the data.
Author: Guillermo Ordoñez
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 0
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Book Description
Abstract: Economic variables are known to move asymmetrically over the business cycle: quickly and sharply during crises, but slowly and gradually during recoveries. Not known is the fact that this asymmetry is stronger in countries with less-developed financial systems. This new fact is documented using cross-country data on loan interest rates, investment, and output. The fact is then explained using a learning model with endogenous flows of information about economic conditions. Asymmetry is shown to be stronger in less-developed countries because these countries have greater financial frictions, which are captured in the model by higher monitoring and bankruptcy costs. These greater frictions magnify the crisis reactions of lending rates and economic activity to shocks and then delay their recovery by restricting the generation of information after the crisis. Empirical evidence and a quantitative exploration of the model show that this explanation is consistent with the data
Author: Mr.Stijn Claessens
Publisher: International Monetary Fund
ISBN: 1475561008
Category : Business & Economics
Languages : en
Pages : 66
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Book Description
This paper reviews the literature on financial crises focusing on three specific aspects. First, what are the main factors explaining financial crises? Since many theories on the sources of financial crises highlight the importance of sharp fluctuations in asset and credit markets, the paper briefly reviews theoretical and empirical studies on developments in these markets around financial crises. Second, what are the major types of financial crises? The paper focuses on the main theoretical and empirical explanations of four types of financial crises—currency crises, sudden stops, debt crises, and banking crises—and presents a survey of the literature that attempts to identify these episodes. Third, what are the real and financial sector implications of crises? The paper briefly reviews the short- and medium-run implications of crises for the real economy and financial sector. It concludes with a summary of the main lessons from the literature and future research directions.
Author: Pierre-Richard Agenor
Publisher:
ISBN:
Category :
Languages : en
Pages : 30
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Book Description
Analysis of data for Brazil suggests that poverty responds asymmetrically to output shocks, showing less tendency to fall in response to a positive shock when the economy is initially in a downturn.Agenor examines whether output contractions associated with cyclical output fluctuations and economic crises have an asymmetric effect on poverty. He identifies four potential sources of asymmetry: expectations and confidence factors, credit rationing at the firm level (induced by either adverse selection problems or negative shocks to net worth), borrowing constraints at the household level, and the quot;labor hoardingquot; hypothesis. He also identifies some testable implications of these alternative explanations.The author then proposes a vector autoregression technique (involving the detrended components of real output, the unemployment rate, real wages, and the poverty rate) to test whether the initial cyclical position of the economy, and the size of the initial drop in the output gap in a downturn, matter in assessing the extent to which output shocks affect poverty. He applies the technique to Brazil, using annual data for 1981-99. The results indicate that poverty responds asymmetrically to output shocks, showing less sensitivity when the economy is initially in a downturn.This paper - a product of the Economic Policy and Poverty Reduction Division, World Bank Institute - is part of a larger effort in the institute to analyze the impact of macroeconomic adjustment on poverty. The author may be contacted at
[email protected].
Author: R. Glenn Hubbard
Publisher: University of Chicago Press
ISBN: 9780226355887
Category : Business & Economics
Languages : en
Pages : 420
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Book Description
Warnings of the threat of an impending financial crisis are not new, but do we really know what constitutes an actual episode of crisis and how, once begun, it can be prevented from escalating into a full-blown economic collapse? Using both historical and contemporary episodes of breakdowns in financial trade, contributors to this volume draw insights from theory and empirical data, from the experience of closed and open economies worldwide, and from detailed case studies. They explore the susceptibility of American corporations to economic downturns; the origins of banking panics; and the behavior of financial markets during periods of crisis. Sever papers specifically address the current thrift crisis—including a detailed analysis of the over 500 FSLIC-insured thrifts in the southeast—and seriously challenge the value of recent measures aimed at preventing future collapse in that industry. Government economists and policy makers, scholars of industry and banking, and many in the business community will find these timely papers an invaluable reference.
Author: Guillermo L. Ordoñez
Publisher:
ISBN:
Category : Economic history
Languages : en
Pages : 37
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Book Description
Author: Rens Vliegenthart
Publisher: Cambridge University Press
ISBN: 9781108948081
Category : Political Science
Languages : en
Pages :
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Book Description
Author: Marc Bartkowiak
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This paper looks at quantitative easing the Eurozone and the United States following the financial crisis of 2008. Particularly it investigates whether there were asymmetric effects with regards to firm size. The paper uses financial market data, including several MSCI indices and factors from the Kenneth R. French Library. Furthermore dates were researched, in order to identify the announcement dates of quantitative easing, in the case of the European Central Bank (as those for the Federal Reserve already exist in the academic literature). The panel data was then regressed using heteroscedastic consistent standard errors. In addition to this, a news-based variable was constructed in order to place event dates in the context of the media coverage at the time and hence be able to gauge the level of expectation of the announcement dates. The results indicate an asymmetric effect such that, on average, in the United States the equity prices of small firms performed superiorly than those of small firms on announcement days of quantitative easing. In the case of the Eurozone no significant statistical difference was observed. The results are largely consistent with the empirical evidence and the academic literature, that smaller firms are more financially constrained and therefore benefit more from monetary expansion and also support the portfolio rebalancing channel of monetary policy. At an event-level analysis, the results clearly indicate that the indices of small and large caps can react differently to announcements. This reaction is based on the type of programme announced as well as the nature of the announcement (whether it is an announcement to commence, reduce or increase the size of a programme). "Sell" announcements show to have relatively consistent results, whilst "buy" announcements vary significantly with regards to their impact.
