Subprime mortgage crisis The s were the decade of subprime borrowers; no longer was this a segment left to fringe lenders. The relaxing of credit lending standards by investment banks and commercial banks drove this about-face. Subprime did not become magically less risky; Wall Street just accepted this higher risk.
Massachusetts Institute of Technology.
Townsend and Alp Simsek Department: Massachusetts Institute of Technology Date Issued: In the first chapter, I study how banks lend or borrow liquidity in the interbank market and what I can learn about the macro-economy from the interbank market.
From a unique database of interbank loan transactions in Mexico, I observe that interest rates vary across different lender-borrower pairs.
I find that this variation is driven by the variation across different banks in their cost from handling an excess or a deficit of liquidity. Using my model, I characterize the shape of the interest rate curve as a function of loan size.
Moreover, I find that the increased disadvantage that small banks experienced in the interbank market during the financial crisis can largely be explained by a shift in the liquidity cost.
In the second chapter, joint with Robert Townsend, we study how banks choose their level of cash holdings, taking into account potential payment demands and the short-term interest rate.
We develop the notion of a rationing equilibrium in the money market, where a unique equilibrium exists for any given short-term rate.
We characterize how changes in the short-term interest rate translate into changes in the banks' lending activities, thus affecting the economy. In addition, we discuss how banks with different characteristics may respond differently to such changes.
In the third chapter, I study a recent change in the typical form of housing rental contracts in Korea. Traditionally, houses were mostly rented in exchange for a zero-interest loan from the renter to the owner of the house.
However, during recent years, such a traditional form of rental agreement has been losing popularity and partially replaced by contracts based on monthly payments to the owner. Using a model of the interaction between the renter and the borrower, I explain how various financial market trends can potentially cause the observed change in the housing rental market.
Cataloged from PDF version of thesis.Thesis: Ph. D., Massachusetts Institute of Technology, Department of Economics, In the first chapter, I study how banks lend or borrow liquidity in the interbank market and what I can learn about the macro-economy from the interbank market.
The University of South Carolina is a globally recognized, high-impact research university located in Columbia, South Carolina. financial institutions’ weaknesses play in contributing to bank failures, and the role that market discipline --the ability of depositors, stockholders, or creditors at large to penalize banks for bad (poor) performance by withdrawing their deposits or by requiring higher.
The four essays in this thesis focus on two areas where financial institutions can affect equilibrium: the importance of the design of monetary institutions for the equilibrium inflation rate, and the link between financial intermediation and the real.
• The challenges of financial institutions in emerging economies • A study into the impact of multinational trade agreements on the growth of emerging economies: The case of Russia Alternative investment – Finance Dissertation Topics.
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