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Essays on Financial Contracting in Macroeconomics.

Record Type:	Language materials, manuscript : Monograph/item
Title/Author:	Essays on Financial Contracting in Macroeconomics./
Author:	Dempsey, Kyle P.
Description:	1 online resource (162 pages)
Notes:	Source: Dissertation Abstracts International, Volume: 78-11(E), Section: A.
Subject:	Economics. -
Online resource:	click for full text (PQDT)
ISBN:	9780355043532

Essays on Financial Contracting in Macroeconomics.
Dempsey, Kyle P.

Essays on Financial Contracting in Macroeconomics. - 1 online resource (162 pages)

Source: Dissertation Abstracts International, Volume: 78-11(E), Section: A.

Thesis (Ph.D.)--The University of Wisconsin - Madison, 2017.

Includes bibliographical references

The first chapter studies the effects of capital requirements on banks when firms can borrow from both bank and non-bank lenders. Banks fund loans with insured deposits and must maintain a minimum capital to asset ratio; non-banks do not. Capital requirements resolve a risk-shifting externality, inducing banks to monitor borrowers, mitigating default risk and reducing bank failures. Although raising capital requirements reduces default on bank loans, aggregate loan default responds non-monotonically as borrowers substitute into non-bank finance. At a low capital requirement, an incentive effect makes bank lending safer: tightening the capital requirement induces banks to monitor more, reducing default on their loans. At higher capital requirements, though, a substitution effect takes over: bank loans become scarce, borrowers substitute into riskier, unmonitored non-bank finance, and aggregate default rises.

Electronic reproduction.
Ann Arbor, Mich. :
ProQuest,
2018

Mode of access: World Wide Web

ISBN: 9780355043532Subjects--Topical Terms:

555568
Economics.
Index Terms--Genre/Form:

554714
Electronic books.

Essays on Financial Contracting in Macroeconomics.
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100 1 $a Dempsey, Kyle P. $3 1184710
245 1 0 $a Essays on Financial Contracting in Macroeconomics.
264 0 $c 2017
300 $a 1 online resource (162 pages)
336 $a text $b txt $2 rdacontent
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500 $a Source: Dissertation Abstracts International, Volume: 78-11(E), Section: A.
500 $a Adviser: Dean Corbae.
502 $a Thesis (Ph.D.)--The University of Wisconsin - Madison, 2017.
504 $a Includes bibliographical references
520 $a The first chapter studies the effects of capital requirements on banks when firms can borrow from both bank and non-bank lenders. Banks fund loans with insured deposits and must maintain a minimum capital to asset ratio; non-banks do not. Capital requirements resolve a risk-shifting externality, inducing banks to monitor borrowers, mitigating default risk and reducing bank failures. Although raising capital requirements reduces default on bank loans, aggregate loan default responds non-monotonically as borrowers substitute into non-bank finance. At a low capital requirement, an incentive effect makes bank lending safer: tightening the capital requirement induces banks to monitor more, reducing default on their loans. At higher capital requirements, though, a substitution effect takes over: bank loans become scarce, borrowers substitute into riskier, unmonitored non-bank finance, and aggregate default rises.
520 $a The second chapter proposes a theory of unsecured consumer credit where: borrowers have the option to default; defaulters are not exogenously excluded from future borrowing; there is free entry of lenders; and lenders cannot collude to punish defaulters. Limited credit through higher interest rates following default arises from lenders' optimal response to limited information about borrowers' types. Lenders learn from an individual's borrowing and repayment behavior about his type, encapsulating his reputation for not defaulting in a credit score. My coauthors and I take the theory to data by matching key data moments such as the overall delinquency rate. We use the model to quantify the value of reputation in the credit market, and compare static and dynamic default costs.
520 $a The third chapter explores empirically how lines of credit extended by banks to firms can amplify financial shocks. The "two-sided run" banks experienced in 2008 deepened the financial crisis and slowed the subsequent recovery. I demonstrate that banks typically finance credit line drawdowns by expanding their balance sheets (mostly through non-deposit debt), and that these drawdowns adversely affect net interest margins. These standard effects did not hold during the recent financial crisis, however. I show that banks responded to increased funding costs by expanding less to meet credit line commitments, and that there were more adverse effects on profitability.
533 $a Electronic reproduction. $b Ann Arbor, Mich. : $c ProQuest, $d 2018
538 $a Mode of access: World Wide Web
650 4 $a Economics. $3 555568
650 4 $a Finance. $3 559073
655 7 $a Electronic books. $2 local $3 554714
690 $a 0501
690 $a 0508
710 2 $a ProQuest Information and Learning Co. $3 1178819
710 2 $a The University of Wisconsin - Madison. $b Economics. $3 1184399
856 4 0 $u http://pqdd.sinica.edu.tw/twdaoapp/servlet/advanced?query=10600628 $z click for full text (PQDT)