A dilution cost approach to financial intermediation and securities markets

Mostra el registre complet Registre parcial de l'ítem

• dc.contributor.author Bolton, Patrickca
• dc.contributor.author Freixas, Xavierca
• dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
• dc.date.accessioned 2017-07-26T10:49:56Z
• dc.date.available 2017-07-26T10:49:56Z
• dc.date.issued 1997-12-01
• dc.date.modified 2017-07-23T02:54:32Z
• dc.description.abstract This paper proposes a model of financial markets and corporate finance, with asymmetric information and no taxes, where equity issues, Bank debt and Bond financing may all co-exist in equilibrium. The paper emphasizes the relationship Banking aspect of financial intermediation: firms turn to banks as a source of investment mainly because banks are good at helping them through times of financial distress. The debt restructuring service that banks may offer, however, is costly. Therefore, the firms which do not expect to be financially distressed prefer to obtain a cheaper market source of funding through bond or equity issues. This explains why bank lending and bond financing may co-exist in equilibrium. The reason why firms or banks also issue equity in our model is simply to avoid bankruptcy. Banks have the additional motive that they need to satisfy minimum capital adequacy requeriments. Several types of equilibria are possible, one of which has all the main characteristics of a "credit crunch". This multiplicity implies that the channels of monetary policy may depend on the type of equilibrium that prevails, leading sometimes to support a "credit view" and other times the classical "money view".
• dc.format.mimetype application/pdfca
• dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=286
• dc.identifier.citation Journal of Political Economy, 108 (2), (2000), pp.324-351
• dc.identifier.uri http://hdl.handle.net/10230/489
• dc.language.iso eng
• dc.relation.ispartofseries Economics and Business Working Papers Series; 286
• dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
• dc.subject.keyword monetary policy
• dc.subject.keyword banks
• dc.subject.keyword financial policy
• dc.subject.keyword capital and ownership structure
• dc.subject.keyword Finance and Accounting
• dc.title A dilution cost approach to financial intermediation and securities marketsca
• dc.type info:eu-repo/semantics/workingPaper