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SUMMARY:Who Borrows from the Lender of Last Resort?
DTSTART:20140926T103000
DTEND:20140926T120000
DTSTAMP:20260427T200115Z
UID:f6933fa8a22d781a2966654c1bf1d6f42ee2ea1fa72255f90461471b
CATEGORIES:Conferences - Seminars
DESCRIPTION:Philipp SCHNABL (NYU Stern)\nWe analyze the Lender of Last Res
 ort (LOLR) intervention undertaken by the European Central Bank from 2007 
 to 2011.  Using a novel dataset on all central bank borrowing and collate
 ral\, we show that weakly-capitalized banks (i) borrowed more from the cen
 tral bank\, and (ii) used riskier collateral to do so.  These relationshi
 ps emerged only after beginning of the sovereign debt crisis in early 2010
 \, and strengthened thereafter.  They hold both across and within countri
 es\, for banks located outside distressed countries\, when bank capital is
  measured pre crisis\, and for different types of risky collateral.  We f
 urther show that weakly-capitalized banks used LOLR loans to actively inve
 st in risky assets\, leading to an aggregate reallocation of risky assets 
 in the financial sector. Our findings are at odds with classical LOLR theo
 ry\, pointing instead to risk taking by banks.
LOCATION:UNIL\, Extranef\, room 126 https://planete.unil.ch/plan/?local=EX
 T-126
STATUS:CONFIRMED
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