More from the Author

• Article | Review of Finance | February 2018

  Financial Repression in the European Sovereign Debt Crisis

  Bo Becker and Victoria Ivashina

  By the end of 2013, the share of government debt held by the domestic banking sectors of Eurozone countries was more than twice its 2007 level. We show that this type of increasing reliance on the domestic banking sector for absorbing government bonds generates a crowding out of corporate lending. For a given domestic firm, new debt is less likely to be a loan—i.e., the loan supply contracts—when local banks have purchased more domestic sovereign debt and when that debt is risky (as measured by CDS spreads). These effects are most pronounced in the period following the second Greek bailout in early 2010.

  Keywords: Credit Cycles; Sovereign debt; Financial Repression; Sovereign Finance; Borrowing and Debt; Credit; Europe;

  Citation:

  Becker, Bo, and Victoria Ivashina. "Financial Repression in the European Sovereign Debt Crisis." Review of Finance 22, no. 1 (February 2018): 83–115.  View Details

  CiteView DetailsSSRNFind at Harvard

  Related

• Working Paper | 2018

  Trade Creditors' Information Advantage

  Victoria Ivashina and Benjamin Iverson

  Using information on the sales of debt claims for 132 U.S. Chapter 11 bankruptcy cases, we show that large trade creditors’ decisions to sell receivables of a distressed company in bankruptcy are predictive of lower recovery rates, and that in such cases these creditors sell ahead of less informed suppliers and other creditors. This result is especially pronounced for more opaque distressed firms, when trade creditors’ information advantage is likely largest. This evidence shows that suppliers that extend significant amounts of trade credit hold private information about their trade partners. Trade creditors who are geographically closer or in similar industries tend to lend the most, suggesting that these are two channels through which suppliers hold an information advantage.

  Keywords: trade credit; Distress; bankruptcy; Credit; Information; Insolvency and Bankruptcy;

  Citation:

  Ivashina, Victoria, and Benjamin Iverson. "Trade Creditors' Information Advantage." NBER Working Paper Series, No. 24269, January 2018.  View Details

  CiteView DetailsSSRNFind at Harvard Read Now

  Related

• Working Paper | 2017

  U.S. Monetary Policy and Emerging Market Credit Cycles

  Falk Bräuning and Victoria Ivashina

  Foreign banks’ lending to firms in emerging market economies (EMEs) is large and denominated predominantly in U.S. dollars. This creates a direct connection between U.S. monetary policy and EME credit cycles. We estimate that over a typical U.S. monetary easing cycle, EME borrowers experience a 32-percentage-point greater increase in the volume of loans issued by foreign banks than do borrowers from developed markets, with a similarly large effect upon reversal of the U.S. monetary policy stance. This result is robust across different geographic regions and industries, and holds for U.S. and non-U.S. lenders, including those with little direct exposure to the U.S. economy. Local EME lenders do not offset the foreign bank capital flows; thus, U.S. monetary policy affects credit conditions for EME firms. We show that the spillover is stronger in higher-yielding and more financially open markets, and for firms with a higher reliance on foreign bank credit.

  Keywords: global business cycle; monetary policy; emerging markets; Reaching for yield; Money; Policy; Emerging Markets; Credit;

  Citation:

  Bräuning, Falk, and Victoria Ivashina. "U.S. Monetary Policy and Emerging Market Credit Cycles." Working Paper, October 2017.  View Details

  CiteView DetailsSSRN

  Related