Credit crunches from occasionally binding bank borrowing constraints? / by Tom D. Holden, Paul Levine and Jonathan M. Swarbrick.: FB3-5/2017-57E-PDF
"We present a model in which banks and other financial intermediaries face both occasionally binding borrowing constraints and costs of equity issuance. Near the steady state, these intermediaries can raise equity finance at no cost through retained earnings. However, even moderately large shocks cause their borrowing constraints to bind, leading to contractions in credit offered to firms, and requiring the intermediaries to raise further funds by paying the cost to issue equity. This leads to the occasional sharp increases in interest spreads and the countercyclical, positively skewed equity issuance that are characteristic of the credit crunches observed in the data"--Abstract, p. ii.
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| Department/Agency | Bank of Canada. |
|---|---|
| Title | Credit crunches from occasionally binding bank borrowing constraints? / by Tom D. Holden, Paul Levine and Jonathan M. Swarbrick. |
| Series title | Bank of Canada staff working paper, 1701-9397 ; 2017-57 |
| Publication type | Series - View Master Record |
| Language | [English] |
| Format | Electronic |
| Electronic document | |
| Note(s) | "December 2017." Includes bibliographical references. Text in English, abstract in English and French. |
| Publishing information | Ottawa : Bank of Canada, 2017. |
| Author / Contributor | Holden, Tom D. Levine, Paul. Swarbrick, Jonathan M. |
| Description | iii, 37 p. : graphs |
| Catalogue number |
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| Subject terms | Banks Credit Loans |