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Capital market failure, adverse selection and equity financing of higher education
Jacobs, Bas; Wijnbergen, Sweder van - 2005
We apply theories of capital market failure to ana1yzeoptima1 financing of risky higher education. In the market solution,students can only finance their education through debt. There isunderinvestment in human capita1, because some students with socia1lyprofitable investments in human capita1...
Persistent link: https://www.econbiz.de/10011343276
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Aggregate stock market illiquidity and bond risk premia
Bouwman, Kees E.; Sojli, Elvira; Tham, Wing Wah - 2012
Persistent link: https://www.econbiz.de/10009724317
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Inherent efficiency, security markets, and the pricing of investment strategies
Zou, Liang - 2000
This paper applies the dichotomous theory of choice by Zou (2000a) tothe analysis of investmentstrategies and security markets. Issues concerning individualoptimality, (approximate) arbitrage,capital market equilibrium, and Pareto efficiency are studied undervarious market conditions. Among the...
Persistent link: https://www.econbiz.de/10011304380
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Valuing Euro rating-triggered step-up telecom bonds
Houweling, Patrick; Mentink, Albertus André; Vorst, Ton - 2003
We value rating-triggered step-up bonds with three methods: (i) the Jarrow, Lando andTurnbull (1997, JLT) framework …, (ii) a similar framework using historical probabilities and(iii) as plain vanilla bonds. We find that the market seems to … value single step-up bondsaccording to the JLT model, while it values multiple step-up bonds as plain vanilla bonds …
Persistent link: https://www.econbiz.de/10011333259
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Investor sentiment and employment
Montone, Maurizio; Zwinkels, Remco C. J. - 2015
We find that investor sentiment should affect a firm's employment policy in a world with moral hazard and noise traders. Consistent with the model's predictions, we show that higher sentiment among US investors leads to: (1) higher employment growth worldwide; (2) lower labor productivity, as the...
Persistent link: https://www.econbiz.de/10010503991
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Regulating the financial cycle : an integrated approach with a leverage ratio
Schoenmaker, Dirk; Wierts, Peter - 2015
We propose a regulatory approach for restricting debt financing as an amplification mechanism across the financial system. A small stylised model illustrates the trade-off between static and time varying limits on leverage in dampening the financial cycle. The policy section proposes its...
Persistent link: https://www.econbiz.de/10010532609
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Complete and incomplete markets with short-sale constraints
Giménez, Eduardo L. - 2001
This paper argues that the introduction of a short-sale constraint in the Arrow-Radner frameworkinvalidates standard definitions of complete and incomplete markets. In this constrained set-up,two threshold values with familiar properties arise.The case of a zero short-sale bound set on some...
Persistent link: https://www.econbiz.de/10011316880
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Banks and market liquidity
Arping, Stefan - 2015
I study a model of market-liquidity provision by levered intermediaries that, besides operating trading desks, run deposit-taking franchises. Levered intermediaries’ heightened incentive to absorb risk helps to counteract liquidity-provision frictions that, in an unlevered economy, would lead...
Persistent link: https://www.econbiz.de/10010477097
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Designing financial support for SMEs during crises : the role of bank lending
Wang, Tianxi; Wang, Xuan - 2021
When designing schemes to help SMEs survive crises, the government typically faces asymmetric information, so that it cannot target the SMEs most worth saving. We show that the government can exploit the information in the borrower loan demand to improve policy targets compared with existing...
Persistent link: https://www.econbiz.de/10012665866
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Support for small businesses amid COVID-19
Goodhart, Charles A. E.; Tsomocos, Dimitrios P.; Wang, Xuan - 2021 - Revision: January 13, 2021
A sizeable proportion of enterprises, especially SMEs, in receipt of financial assistance from the government, will fail to repay. In this paper we asked whether, and to what extent, it may be beneficial to apply a screening mechanism to deter those mostly likely to fail to repay from seeking...
Persistent link: https://www.econbiz.de/10012251378