Bank capital, firm liquidity, and project quality

• 成果类型: Article
• 署名作者: Minetti, Raoul
• 署名单位: Michigan State University
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2007.01.002
• 发表日期: 2007
• 页码: 2584-2594
• 关键词: capital crunch; firm liquidity; technology choice; secondary market

摘要

We construct an economy where a two way interaction between bank capital and project quality propagates negative shocks to technology or regulation. By shrinking the available liquidity and the scale of their activity, a contraction in bank loans discourages entrepreneurs from sustaining the setup effort of high quality projects, inducing them to shift to low quality ones. The deterioration in project quality erodes the value of bank assets and, hence, banks' capitalization and loanable funds. Lack of information in the secondary market for bank assets amplifies the propagation. (c) 2007 Elsevier B.V. All rights reserved.