Local financial capacity and asset values: Evidence from bank failures

• 成果类型: Article
• 署名作者: Rajan, Raghuram; Ramcharan, Rodney
• 署名单位: University of Chicago; Reserve Bank of India; University of Southern California; University of Southern California
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2015.01.006
• 发表日期: 2016
• 页码: 229-251
• 关键词: Financial crises; banks; Fire-sales

摘要

Using differences in regulation as a means of identification, we find that a reduction in local financial intermediation capacity reduces the recovery rates on assets of failing banks. It also depresses local land prices and is associated with subsequent distress in nearby banks. Fire sales appear to be one channel through which lower local intermediation capacity reduces the recovery rates on failed banks' assets. The paper provides a rationale for why bank failures are contagious, and why the value of specialized financial assets could depend on the size of the intermediary market that is available to buy it. (C) 2016 Elsevier B.V. All rights reserved.