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- Publisher Website: 10.1016/j.jmoneco.2017.09.012
- Scopus: eid_2-s2.0-85031726008
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Article: Credit expansion and credit misallocation
Title | Credit expansion and credit misallocation |
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Authors | |
Keywords | Financial intermediaries Corporate liquidity Collateral values Asset specificity Speculation |
Issue Date | 2018 |
Citation | Journal of Monetary Economics, 2018, v. 94, p. 27-40 How to Cite? |
Abstract | © 2017 Elsevier B.V. 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. |
Persistent Identifier | http://hdl.handle.net/10722/279351 |
ISSN | 2023 Impact Factor: 4.3 2023 SCImago Journal Rankings: 6.564 |
SSRN | |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Bleck, Alexander | - |
dc.contributor.author | Liu, Xuewen | - |
dc.date.accessioned | 2019-10-28T03:02:25Z | - |
dc.date.available | 2019-10-28T03:02:25Z | - |
dc.date.issued | 2018 | - |
dc.identifier.citation | Journal of Monetary Economics, 2018, v. 94, p. 27-40 | - |
dc.identifier.issn | 0304-3932 | - |
dc.identifier.uri | http://hdl.handle.net/10722/279351 | - |
dc.description.abstract | © 2017 Elsevier B.V. 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. | - |
dc.language | eng | - |
dc.relation.ispartof | Journal of Monetary Economics | - |
dc.subject | Financial intermediaries | - |
dc.subject | Corporate liquidity | - |
dc.subject | Collateral values | - |
dc.subject | Asset specificity | - |
dc.subject | Speculation | - |
dc.title | Credit expansion and credit misallocation | - |
dc.type | Article | - |
dc.description.nature | link_to_subscribed_fulltext | - |
dc.identifier.doi | 10.1016/j.jmoneco.2017.09.012 | - |
dc.identifier.scopus | eid_2-s2.0-85031726008 | - |
dc.identifier.volume | 94 | - |
dc.identifier.spage | 27 | - |
dc.identifier.epage | 40 | - |
dc.identifier.isi | WOS:000433017200002 | - |
dc.identifier.ssrn | 1945701 | - |
dc.identifier.issnl | 0304-3932 | - |