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UID:91dee89469ba2184ad5f7ced838f841d
CATEGORIES:Seminars
CREATED:20150210T191316
SUMMARY:Tobias Adrian - FED New York
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:<p style="text-align: justify;"><strong>Intermediary Leverage Cycles and Fi
 nancial Stability</strong></p><p style="text-align: justify;">Abstract:</p>
 <p style="text-align: justify;">We present a theory of financial intermedia
 ry leverage cycles within a dynamic model of the macroeconomy. Intermediari
 es face risk-based funding constraints that give rise to procyclical levera
 ge and a procyclical share of intermediated credit. The pricing of risk var
 ies as a function of intermediary leverage, and asset return exposure to in
 termediary leverage shocks earns a positive risk premium. Relative to an ec
 onomy with constant leverage, financial intermediaries generate higher cons
 umption growth and lower consumption volatility in normal times, at the cos
 t of endogenous systemic financial risk. The severity of systemic crisis de
 pends on intermediaries’ leverage and net worth. Regulations that tighten f
 unding constraints affect the systemic risk-return trade-off by lowering th
 e likelihood of systemic crises at the cost of higher pricing of risk.</p>
DTSTAMP:20260406T002702Z
DTSTART:20140908T173000Z
DTEND:20140908T190000Z
SEQUENCE:0
TRANSP:OPAQUE
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