Bank Liabilities Channel

The financial intermediation sector is important not only for channeling resources from agents in excess of funds to agents in need of funds (lending channel). By issuing liabilities it also creates financial assets held by other sectors of the economy for insurance purpose. When the intermediation sector creates less liabilities or their value falls, agents are less willing to engage in activities that are individually risky but desirable in aggregate (bank liabilities channel). The paper studies how financial crises driven by self-fulfilling expectations are transmitted, through this channel, to the real sector of the economy.

[1]  N. Kocherlakota.  Bursting Bubbles: Consequences and Cures ∗ , 2009 .

[2]  P. Lane,et al.  The External Wealth of Nations Mark II : Revised and Extended Estimates of Foreign Assets and Liabilities, 1970–2004 , 2006 .

[3]  Nobuhiro Kiyotaki,et al.  Credit Cycles , 1995, Journal of Political Economy.

[4]  M. Gertler,et al.  A model of unconventional monetary policy , 2011 .

[5]  M. Azzimonti,et al.  Financial Globalization , Inequality , and the Rising of Public Debt ∗ , 2012 .

[6]  Qi Sun,et al.  Financing Intangible Capital , 2016, Journal of Financial Economics.

[7]  N. Kiyotaki,et al.  Financial Intermediation and Credit Policy in Business Cycle Analysis , 2010 .

[8]  L. Guiso,et al.  Heterogeneity in Returns to Wealth and the Measurement of Wealth Inequality , 2016 .

[9]  Pengfei Wang,et al.  Bubbles and Credit Constraints , 2011 .

[10]  Markus K. Brunnermeier,et al.  On the Optimal Inflation Rate , 2016 .

[11]  P. Lane,et al.  The External Wealth of Nations Mark Ii: Revised and Extended Estimates of Foreign Assets and Liabilities, 1970-2004 , 2006, SSRN Electronic Journal.

[12]  N. Moyen,et al.  Corporate Cash Holdings and Credit Line Usage , 2016 .

[13]  J. Tirole,et al.  Financial Intermediation, Loanable Funds, and The Real Sector , 1997 .

[14]  J. Driscoll,et al.  Finance and Economics Discussion Series Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board , Washington , D . C . Bank Liquidity and Capital Regulation in General Equilibrium , 2014 .

[15]  E. Mendoza,et al.  Optimal Time-Consistent Macroprudential Policy , 2013, Journal of Political Economy.

[16]  Toni M. Whited,et al.  The Corporate Propensity to Save , 2007 .

[17]  Bent E. Sørensen,et al.  Deep Financial Integration and Volatility , 2010 .

[18]  H. Uhlig,et al.  Bank Finance Versus Bond Finance , 2011 .

[19]  Cash Holdings and Risky Access to Future Credit , 2014 .

[20]  B. Bernanke,et al.  Agency Costs, Net Worth, and Business Fluctuations , 1988 .

[21]  Ariel Zetlin-Jones,et al.  External Financing and the Role of Financial Frictions over the Business Cycle: Measurement and Theory , 2012 .

[22]  Paolo Colla,et al.  Which Financial Frictions? Parsing the Evidence from the Financial Crisis of 2007 to 2009 , 2013, NBER Macroeconomics Annual.

[23]  Yicheng Wang.  Debt-Market Friction, Firm-specific Knowledge Capital Accumulation and Macroeconomic Implications , 2017 .

[24]  S. V. D. Heuvel,et al.  The Welfare Cost of Bank Capital Requirements , 2008 .

[25]  J. Sim,et al.  Rising Intangible Capital, Shrinking Debt Capacity, and the US Corporate Savings Glut , 2013, The Journal of Finance.

[26]  Bent E. Sørensen,et al.  Leverage Across Firms, Banks, and Countries , 2011 .

[27]  José-Víctor Ríos-Rull,et al.  Financial Integration, Financial Development, and Global Imbalances , 2007, Journal of Political Economy.

[28]  Markus K. Brunnermeier,et al.  A Macroeconomic Model with a Financial Sector , 2012 .

[29]  Stephen D. Williamson.  Liquidity, Monetary Policy, and the Financial Crisis: A New Monetarist Approach , 2012 .

[30]  N. Bloom.  The Impact of Uncertainty Shocks , 2007 .

[31]  E. Papaioannou,et al.  Global Banks and Crisis Transmission , 2012 .

[32]  Kevin Moran,et al.  The Role of Bank Capital in the Propagation of Shocks , 2010 .

[33]  P. Kehoe,et al.  Financial Markets and Fluctuations in Uncertainty , 2011 .

[34]  Andrea L. Eisfeldt,et al.  Aggregate External Financing and Savings Waves , 2014 .

[35]  Vincenzo Quadrini,et al.  Nber Working Paper Series Financial Globalization, Financial Crises and Contagion , 2009 .

[36]  N. Kiyotaki,et al.  Banking, Liquidity and Bank Runs in an Infinite-Horizon Economy , 2013 .

[37]  Giacomo Rondina.  Non-Fundamental Dynamics and Financial Markets Integration , 2013 .

[38]  S. Viswanathan,et al.  Financial Intermediary Capital , 2011 .

[39]  Andrea L. Eisfeldt,et al.  Aggregate Issuance and Savings Waves , 2014 .

[40]  F. Boissay,et al.  The Collateral Trap , 2014 .

[41]  F. Smets,et al.  Booms and Systemic Banking Crises , 2013, SSRN Electronic Journal.

[42]  Dean Corbae,et al.  A Quantitative Model of Banking Industry Dynamics , 2010 .