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on Financial Markets |
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Issue of 2010‒04‒11
two papers chosen by |
| By: | Gara Afonso; Anna Kovner; Antoinette Schoar |
| Abstract: | This paper examines the impact of the financial crisis of 2008, specifically the bankruptcy of Lehman Brothers, on the federal funds market. Rather than a complete collapse of lending in the presence of a market-wide shock, we see that banks became more restrictive in their choice of counterparties. Following the Lehman bankruptcy, we find that amounts and spreads became more sensitive to a borrowing bank's characteristics. While the market did not contract dramatically, lending rates increased. Further, the market did not seem to expand to meet the increased demand predicted by the drop in other bank funding markets. We examine discount window borrowing as a proxy for unmet fed funds demand and find that the fed funds market is not indiscriminate. As expected, borrowers who access the discount window have a lower return on assets. On the lender side, we do not find that the characteristics of the lending bank significantly affect the amount of interbank loans it makes. In particular, we do not find that worse performing banks began hoarding liquidity and indiscriminately reducing their lending. |
| Keywords: | Federal funds ; Financial crises ; Bank liquidity ; Interbank market ; Discount window |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:437&r=fmk |
| By: | Oleg Badunenko; Christopher F. Baum; Dorothea Schäfer |
| Abstract: | The paper investigates whether the presence and tenure of Private Equity (PE) investment in European companies improves their performance. Previous studies documented the unambiguous merit of a buyout during the 1980s and 1990s for listed firms in the US and UK markets. This study analyzes such influences in both listed and unlisted European firms during 2002-2007. Our analysis suggests that shortterm PE investments have, on average, a detrimental effect on firm performance. The performance of a firm that has PE backing is lower than that of a firm without PE backing in the first year of PE investment. Such an effect disappears if PE investments remain in the firm for an uninterrupted six-year term |
| Keywords: | Private equity financing, corporate finance |
| JEL: | M14 G24 G34 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp990&r=fmk |