We examine in a Cournot duopoly model the well known view that short-term capital market debt can control managerial moral hazard. We show that short-term debt does not provide this discipline because of management’s manipulation of the information flow to the market. Shareholders may nevertheless prefer short-term debt because it motivates management to be more aggressive in the product market...

Executive compensation is designed to create incentives for CEOs to act in the best interest of shareholders. Short-term (bonus) and equity-based incentives induce risk taking behaviors of the CEO that could further change a firm’s risk exposure. This article examines the linkage between compensation components and the impacts on a firm’s credit risk using data from the U.S. and Germany. In the...

If access to credit is limited (especially when young or unemployed) but ”bad” jobs are easy to come by, then job seekers might use short term employment in undesirable jobs as a way to finance consumption during subsequent unemployed search for a “good” job. In this paper we explore this idea in two ways. First, we document empirical patterns of short term employment and asset accumulation amo...

The role of banking and finance in the Golden Age of European growth (1950-1973) is very little known and widely underestimated. This paper studies the French system of economic planning and investment-based strategy that enhanced medium and long-term financing (called “investment credit” at that time). First, I describe the new institutions that were built after WWII to organize credit allocat...

This paper presents an internally consistent analysis of the economic determinants of the term structure of credit spreads across different credit rating classes and industry sectors. Our analysis proceeds in two steps. First, we extract three economic factors from 13 time series that capture three major dimensions of the economy: inflation pressure, real output growth, and financial market vol...

Abstract This paper develops a New Keynesian model featuring financial intermediation, short- and long-term bonds, credit shocks, scope for unconventional monetary policy. The log-linearized reduces to four equations: Phillips IS curves, as well policy rules the short-term interest rate central bank's long-bond portfolio (QE). Credit shocks QE appear in both curves. In equilibrium, optimal enta...

This study evaluates the impact of earnings on firm credit risk as captured by Credit Default Swaps (CDS). We find that earnings (changes) are negatively correlated with one-year swap premia (changes) after controlling for equity returns but not with longer term premia (changes). We also find that earnings surprises are significantly correlated with one-year CDS premia changes in the short wind...

En tiempos de tasas interés históricamente bajas, las cooperativas ahorro y crédito parecen prometer altas con un riesgo crediticio comparativamente bajo. Perú es uno los países más desarrollados América Latina en lo que respecta al sector cooperativo atractivo, ya se espera esas instituciones paguen tarifas muy superiores a del mercado. El valor este documento evaluar si retorno están justific...