Local financial capacity and asset values: Evidence from bank failures

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• 作者：Raghuram Rajan^a ; Rodney Ramcharan^b ; ^{rramchar@usc.edu" class="auth_mail" title="E-mail the corresponding author}
• 关键词：Financial crises ; Banks ; Fire-sales
• 刊名：Journal of Financial Economics
• 出版年：2016
• 出版时间：May 2016
• 年：2016
• 卷：120
• 期：2
• 页码：229-251
• 全文大小：3835 K

文摘

Using differences in regulation as a means of identification, we find that a reduction in local financial intermediation capacity reduces the recovery rates on assets of failing banks. It also depresses local land prices and is associated with subsequent distress in nearby banks. Fire sales appear to be one channel through which lower local intermediation capacity reduces the recovery rates on failed banks’ assets. The paper provides a rationale for why bank failures are contagious, and why the value of specialized financial assets could depend on the size of the intermediary market that is available to buy it.