A Q-theory of banks / by Juliane Beganau, Saki Bigio, Jeremy Majerovitz and Matias Vieyra.: FB3-5/2021-44E-PDF
"We document five facts about banks: (1) market and book leverage diverged during the 2008 crisis, (2) Tobin's Q predicts future profitability, (3) neither book nor market leverage appears constrained, (4) banks maintain a market-leverage target that is reached slowly, and (5) pre-crisis, leverage was predominantly adjusted by liquidating assets. After the crisis, the adjustment shifted towards retaining earnings. We present a Q-theory where notions of leverage differ because book accounting is slow to acknowledge loan losses. We estimate the model and show that it reproduces the facts. We examine counterfactuals where different accounting rules produce novel policy tradeoffs"--Abstract, page iii.
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| Department/Agency | Bank of Canada, issuing body. |
|---|---|
| Title | A Q-theory of banks / by Juliane Beganau, Saki Bigio, Jeremy Majerovitz and Matias Vieyra. |
| Series title | Staff working paper = Document de travail du personnel, 1701-9397 ; 2021-44 |
| Publication type | Series - View Master Record |
| Language | [English] |
| Format | Electronic |
| Electronic document | |
| Note(s) | "September 24, 2021." Cover title. Includes bibliographical references (pages 39-44). |
| Publishing information | Ottawa, Ontario, Canada : Bank of Canada = Banque du Canada, 2021. ©2021 |
| Author / Contributor | Beganau, Juliane, author. |
| Description | 1 online resource (iii, 52 pages) : graphs. |
| Catalogue number |
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| Subject terms | Financial institutions. Financial leverage. Institutions financières. Effet de levier. |
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