Financial Intermediary Balance Sheet Management

Financial Intermediary Capital

We propose a dynamic theory of financial intermediaries as collateralization specialists that are better able to collateralize claims than households. Intermediaries require capital as they can borrow against their loans only to the extent that households themselves can collateralize the assets backing the loans. The net worth of financial intermediaries and the corporate sector are both state ...

Financial Constraints and the Balance Sheet Channel: a Re- Interpretation

Aggregate demand models extending IS/LM fixed price framework yield an enhancement mechanism of the traditional monetary transmission mechanism, the credit channel, which, according to the credit view, works through the ‘balance sheet channel’ and the ‘bank lending channel’. In this paper I modify the augmented IS/LM model assuming that investments may be financed by both internal and external ...

Financial pressure and balance sheet adjustment by UK firms

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Balance Sheet

Systematic Information Manipulation by Financial Intermediary

We study real e ects of intermediation in a dual nancial system that features coexistence of an open exchange and OTC bilateral market. Both markets trade futures on commodity, but volumes traded on bilateral market are hidden. That friction obstructs learning, as in order to correctly predict future spot price, uninformed traders have to infer realized productivity shock only from a fraction o...