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Simon Gilchrist - One of the best experts on this subject based on the ideXlab platform.
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the role of Credit Market imperfections in the monetary transmission mechanism arguments and evidence
Social Science Research Network, 1993Co-Authors: Mark Gertler, Simon GilchristAbstract:Recently, a debate has resurfaced on whether and how Credit Market imperfections may play a role in the transmission of monetary policy. This new literature attempts to identify the effects of Credit Market imperfections by analyzing the response to tight money of different forms of Credit and different types of borrowers. The arguments and evidence in this literature are reviewed and some new evidence is presented. There is a striking difference in response of Credit flows to small versus large borrowers, potentially consistent with the view that Credit Market imperfections help propagate the impact of monetary policy.
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the role of Credit Market imperfections in the monetary transmission mechanism arguments and evidence
The Scandinavian Journal of Economics, 1993Co-Authors: Mark Gertler, Simon GilchristAbstract:Recently, a debate has resurfaced on whether and how Credit Market imperfections may play a role in the transmission of monetary policy. This new literature attempts to identify the effect s of Credit Market imperfections by analyzing the response to tight mo ney of different forms of Credit and different types of borrowers. The arguments and evidence in this literature are reviewed and some new evidence is presented. There is a striking difference in response of Credit flows to small versus large borrowers, potentially consistent with the view that Credit Market imperfections help propagate the impact of monetary policy. Copyright 1993 by The editors of the Scandinavian Journal of Economics.
Mark Gertler - One of the best experts on this subject based on the ideXlab platform.
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Aggregate Implications of Credit Market Imperfections [with Comments and Discussion]
NBER Macroeconomics Annual, 2007Co-Authors: Kiminori Matsuyama, Mark Gertler, Nobuhiro KiyotakiAbstract:Credit Market imperfections provide the key to understanding many important issues in business cycles, growth and development, and international economics. Recent progress in these areas, however, has left in its wake a bewildering array of individual models with seemingly conflicting results. This paper offers a road map. Using the same single model of Credit Market imperfections throughout, it brings together a diverse set of results within a unified framework. In so doing, it aims to draw a coherent picture, so that one is able to see close connections between these results, thereby showing how a wide range of aggregate phenomena may be attributed to the common cause. They include, among other things, endogenous investment-specific technical changes, development traps, leapfrogging, persistent recessions, recurring boom-and-bust cycles, reverse international capital flows, the rise and fall of inequality across nations, and the patterns of international trade. The framework is also used to investigate ...
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the role of Credit Market imperfections in the monetary transmission mechanism arguments and evidence
Social Science Research Network, 1993Co-Authors: Mark Gertler, Simon GilchristAbstract:Recently, a debate has resurfaced on whether and how Credit Market imperfections may play a role in the transmission of monetary policy. This new literature attempts to identify the effects of Credit Market imperfections by analyzing the response to tight money of different forms of Credit and different types of borrowers. The arguments and evidence in this literature are reviewed and some new evidence is presented. There is a striking difference in response of Credit flows to small versus large borrowers, potentially consistent with the view that Credit Market imperfections help propagate the impact of monetary policy.
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the role of Credit Market imperfections in the monetary transmission mechanism arguments and evidence
The Scandinavian Journal of Economics, 1993Co-Authors: Mark Gertler, Simon GilchristAbstract:Recently, a debate has resurfaced on whether and how Credit Market imperfections may play a role in the transmission of monetary policy. This new literature attempts to identify the effect s of Credit Market imperfections by analyzing the response to tight mo ney of different forms of Credit and different types of borrowers. The arguments and evidence in this literature are reviewed and some new evidence is presented. There is a striking difference in response of Credit flows to small versus large borrowers, potentially consistent with the view that Credit Market imperfections help propagate the impact of monetary policy. Copyright 1993 by The editors of the Scandinavian Journal of Economics.
Tarik Roukny - One of the best experts on this subject based on the ideXlab platform.
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generalists and specialists in the Credit Market
Journal of Banking and Finance, 2020Co-Authors: Daniel Fricke, Tarik RouknyAbstract:In this paper, we propose a method to analyze the structure of the Credit Market. Using historical data from Japan, we explore banks’ lending patterns to the real economy. We find that generalist banks (with diversified lending) and specialist banks (with focused lending) coexist, and tend to stick to their strategies over time. Similarly, we also document the coexistence of generalist and specialist industries (based on their borrowing patterns). The observed interaction patterns in the Credit Market indicate a strong overlap in banks’ loan portfolios, mainly due to specialist banks focusing their investments on the very same generalist industries. A stylized model matches these patterns and allows us to identify economically meaningful sets of generalist banks/industries. Lastly, we find that generalist banks are not necessarily less vulnerable to shocks compared to specialists. In fact, high leverage levels can undo the benefits of diversification.
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generalists and specialists in the Credit Market
Social Science Research Network, 2016Co-Authors: Daniel Fricke, Tarik RouknyAbstract:In this paper, we propose a method to analyze the structure of the Credit Market. Using historical data from Japan, we explore banks’ lending patterns to the real economy. We find that generalist banks (with diversified lending) and specialist banks (with focused lending) coexist, and tend to stick to their strategies over time. Similarly, we also document the coexistence of generalist and specialist industries (based on their borrowing patterns). The observed interaction patterns in the Credit Market indicate a strong overlap in banks’ loan portfolios, mainly due to specialist banks focusing their investments on the very same generalist industries. A stylized model matches these patterns and allows us to identify economically meaningful sets of generalist banks/industries. Lastly, we find that generalist banks are not necessarily less vulnerable to shocks compared to specialists. In fact, we show that high leverage levels can undo the benefits of diversification. Hence, banks’ position in the Credit network can be informative about their riskiness from a systemic perspective.
Daniel Fricke - One of the best experts on this subject based on the ideXlab platform.
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generalists and specialists in the Credit Market
Journal of Banking and Finance, 2020Co-Authors: Daniel Fricke, Tarik RouknyAbstract:In this paper, we propose a method to analyze the structure of the Credit Market. Using historical data from Japan, we explore banks’ lending patterns to the real economy. We find that generalist banks (with diversified lending) and specialist banks (with focused lending) coexist, and tend to stick to their strategies over time. Similarly, we also document the coexistence of generalist and specialist industries (based on their borrowing patterns). The observed interaction patterns in the Credit Market indicate a strong overlap in banks’ loan portfolios, mainly due to specialist banks focusing their investments on the very same generalist industries. A stylized model matches these patterns and allows us to identify economically meaningful sets of generalist banks/industries. Lastly, we find that generalist banks are not necessarily less vulnerable to shocks compared to specialists. In fact, high leverage levels can undo the benefits of diversification.
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generalists and specialists in the Credit Market
Social Science Research Network, 2016Co-Authors: Daniel Fricke, Tarik RouknyAbstract:In this paper, we propose a method to analyze the structure of the Credit Market. Using historical data from Japan, we explore banks’ lending patterns to the real economy. We find that generalist banks (with diversified lending) and specialist banks (with focused lending) coexist, and tend to stick to their strategies over time. Similarly, we also document the coexistence of generalist and specialist industries (based on their borrowing patterns). The observed interaction patterns in the Credit Market indicate a strong overlap in banks’ loan portfolios, mainly due to specialist banks focusing their investments on the very same generalist industries. A stylized model matches these patterns and allows us to identify economically meaningful sets of generalist banks/industries. Lastly, we find that generalist banks are not necessarily less vulnerable to shocks compared to specialists. In fact, we show that high leverage levels can undo the benefits of diversification. Hence, banks’ position in the Credit network can be informative about their riskiness from a systemic perspective.
Li-an Zhou - One of the best experts on this subject based on the ideXlab platform.
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Rosca Meets Formal Credit Market
National Bureau of Economic Research, 2015Co-Authors: Hanming Fang, Li-an ZhouAbstract:Rotating Savings and Credit Association (Rosca) is an important informal financial institution in many parts of the world used by participants to share income risks. What is the role of Rosca when formal Credit Market is introduced? We develop a model in which risk-averse participants attempt to hedge against their private income shocks with access to both Rosca and the formal Credit and investigate their interactions. Using the gap of the borrowing and saving interest rates as a measure of the imperfectness of the Credit Market, we compare three cases: (i) Rosca without Credit Market; (ii) Rosca with a perfect Credit Market; (iii) Rosca with an imperfect Credit Market. We show that a perfect Credit Market completely crowds out the role of Rosca. However, when Credit Market is present but imperfect, we show that Rosca and the formal Credit Market can complement each other in improving social welfare. Interestingly, we find that the social welfare in an environment with both Rosca and formal Credit Market does not necessarily increase monotonically as the imperfectness of the Credit Market converges to zero.
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Rosca Meets Formal Credit Market
2015Co-Authors: Hanming Fang, Li-an ZhouAbstract:Rotating Savings and Credit Association (Rosca) is an important informal financial institution in many parts of the world used by participants to share income risks. What is the role of Rosca when formal Credit Market is introduced? We develop a model in which risk-averse participants attempt to hedge against their private income shocks with access to both Rosca and the formal Credit and investigate their interactions. Using the gap of the borrowing and saving interest rates as a measure of the imperfectness of the Credit Market, we compare three cases: (i) Rosca without Credit Market; (ii) Rosca with a perfect Credit Market; (iii) Rosca with an imperfect Credit Market. We show that a perfect Credit Market completely crowds out the role of Rosca. However, when Credit Market is present but imperfect, we show that Rosca and the formal Credit Market can complement each other in improving social welfare. Interestingly, we find that the social welfare in an environment with both Rosca and formal Credit Market does not necessarily increase monotonically as the imperfectness of the Credit Market converges to zero.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.