Going-Concern Debt of Financial Intermediaries / Yueran Ma, José A. Scheinkman.

Format:

Book

Author/Creator:

Ma, Yueran.

Contributor:

National Bureau of Economic Research.

Scheinkman, José A.

Series:

Working Paper Series (National Bureau of Economic Research) no. w28088.

NBER working paper series no. w28088

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

We study asset and debt characteristics of US bank holding companies. We show that financial institutions, especially large institutions, are not just about holding discrete assets. Services and going-concern values are important, and capital market debt against going-concern values accounts for 10% to 15% of total assets, comparable to the volume of capital market debt against discrete assets. We find that financial institutions' debt against going-concern values has weak monitoring, relative to similar debt among non-financial firms. We argue that weak monitoring prevails because creditors cannot easily punish or restructure these institutions should they violate covenants, which limits covenants' usefulness.

Notes:

Print version record

November 2020.