NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

S. Vish Viswanathan

Duke University
Fuqua School of Business
100 Fuqua Drive
Durham, NC 27708

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
WWW:
NBER Program Affiliations: CF
NBER Affiliation: Research Associate

NBER Working Papers and Publications

March 2017Financial Intermediary Capital
with Adriano A. Rampini: w23302
We propose a dynamic theory of financial intermediaries that are better able to collateralize claims than households, that is, have a collateralization advantage. Intermediaries require capital as they can borrow against their loans only to the extent that households themselves can collateralize the assets backing these loans. The net worth of financial intermediaries and the corporate sector are both state variables affecting the spread between intermediated and direct finance and the dynamics of real economic activity, such as investment, and financing. The accumulation of net worth of intermediaries is slow relative to that of the corporate sector. The model is consistent with key stylized facts about macroeconomic downturns associated with a credit crunch, namely, their severity, their...
May 2016Household Risk Management
with Adriano A. Rampini: w22293
Households' insurance against shocks to income and asset values (that is, household risk management) is limited, especially for poor households. We argue that a trade-off between intertemporal financing needs and insurance across states explains this basic insurance pattern. In a model with limited enforcement, we show that household risk management is increasing in household net worth and income, incomplete, and precautionary. These results hold in economies with income risk, durable goods and collateral constraints, and durable goods price risk, under quite general conditions and, remarkably, risk aversion is sufficient and prudence is not required. In equilibrium, collateral scarcity lowers the interest rate, reduces insurance, and increases inequality.
March 2010Leverage, Moral Hazard and Liquidity
with Viral V. Acharya: w15837
We build a model of the financial sector to explain why adverse asset shocks in good economic times lead to a sudden drying up of liquidity. Financial firms raise short-term debt in order to finance asset purchases. When asset fundamentals worsen, debt induces firms to risk-shift; this limits their funding liquidity and their ability to roll over debt. Firms may de-lever by selling assets to better-capitalized firms. Thus the market liquidity of assets depends on the severity of the asset shock and the system-wide distribution of leverage. This distribution of leverage is, however, itself endogenous to future prospects. In particular, short-term debt is relatively cheap to issue in good times when expectations of asset fundamentals are benign, resulting in entry to the financial sector of ...

Published: Viral V. Acharya & S. Viswanathan, 2011. "Leverage, Moral Hazard, and Liquidity," Journal of Finance, American Finance Association, vol. 66(1), pages 99-138, 02. citation courtesy of

 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us