Arbeitspapier
Credit crunches from occasionally binding bank borrowing constraints
We present a model in which banks and other financial intermediaries face both occasionally binding borrowing constraints and costs of equity issuance. Near the steady state, these intermediaries can raise equity finance at no cost through retained earnings. However, even moderately large shocks cause their borrowing constraints to bind, leading to contractions in credit offered to firms, and requiring the intermediaries to raise further funds by paying the cost to issue equity. This leads to the occasional sharp increases in interest spreads and the countercyclical, positively skewed equity issuance that are characteristic of the credit crunches observed in the data.
- Sprache
-
Englisch
- Erschienen in
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Series: Bank of Canada Staff Working Paper ; No. 2017-57
- Klassifikation
-
Wirtschaft
Investment; Capital; Intangible Capital; Capacity
Business Fluctuations; Cycles
Money Supply; Credit; Money Multipliers
- Thema
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Business fluctuations and cycles
Credit and credit aggregates
Economicmodels
Financial markets
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Holden, Tom D.
Levine, Paul
Swarbrick, Jonathan M.
- Ereignis
-
Veröffentlichung
- (wer)
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Bank of Canada
- (wo)
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Ottawa
- (wann)
-
2017
- DOI
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doi:10.34989/swp-2017-57
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:45 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Holden, Tom D.
- Levine, Paul
- Swarbrick, Jonathan M.
- Bank of Canada
Entstanden
- 2017
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