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UID:c285a3ad7b7953bb2ec608ef86fdddae
CATEGORIES:Seminars
CREATED:20150504T183126
SUMMARY:Lunch Seminar: Tano Santos - Columbia University
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:Saving Gluts, Lending Booms, Minsky moments\nAbstract:\nWe investigate the 
 effects of an increase of the savings rate on the incentives to originate h
 igh quality assets and on financial fragility.\n Originators incur private 
 costs when originating high quality assets. Assets are subsequently distrib
 uted in two markets by the financial sector: A private market where informe
 d capital cream skims the best assets and a market that absorbs the pool of
  uninformed capital, an uninformed exchange. Informed capital matters becau
 se it provides incentives for good origination. Liquidity matters because i
 t determines prices in the uninformed exchange. Two factors determine asset
  quality: the level of informed capital and the price spread between the pr
 ivate market and the uninformed exchange. If the level of informed capital 
 is fixed an increase in the savings rate increases prices in the exchange a
 nd a narrowing of the spread which results in a deterioration of originatio
 n incentives. When the amount of informed capital is endogenously determine
 d we show that in general origination incentives are non monotone in the sa
 vings rate. We show that when informed agents are able to take on leverage,
  leverage and the leverage ratio are increasing in the savings rate. The co
 mbination of asset deterioration and more leverage increases financial frag
 ility.\n\n\n \n
DTSTAMP:20260406T163537Z
DTSTART:20150605T130000Z
DTEND:20150605T140000Z
SEQUENCE:0
TRANSP:OPAQUE
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