Paul Levine

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Credit Crunches from Occasionally Binding Bank Borrowing Constraints

Staff Working Paper 2017-57 Tom D. Holden, Paul Levine, Jonathan M. Swarbrick
We present a model in which banks and other financial intermediaries face both occasionally binding borrowing constraints and costs of equity issuance. Near the steady state, these intermediaries can raise equity finance at no cost through retained earnings.

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