Credit expansion and credit misallocation

• 成果类型: Article
• 署名作者: Bleck, Alexander; Liu, Xuewen
• 署名单位: University of British Columbia; Hong Kong University of Science & Technology
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2017.09.012
• 发表日期: 2018
• 页码: 27-40
• 关键词: Corporate liquidity; Collateral values; Asset specificity; speculation; Financial intermediaries

摘要

We develop a general equilibrium model to analyze the interaction between two sectors with differing degree of financial friction in the context of liquidity injections (credit expansion). We show that excessive liquidity injection can overheat the sector with lower friction, crowding liquidity out of the sector with higher friction. The crowding-out manifests in a self-reinforcing spiral because of feedback between liquidity inflows, asset prices, and collateral values. The paper highlights the effect of financial frictions on the allocation and distribution of liquidity in an economy, demonstrating misallocation of liquidity (credit) under excessive liquidity injection. (C) 2017 Elsevier B.V. All rights reserved.