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Distress selling and asset market feedback

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Author Info

  • Ilhyock Shim
  • Goetz von Peter

Abstract

This paper examines the process of distress selling and asset market feedback. It splits this process into several stages, in order to analyse what triggers distress selling, why asset prices fall, and how falling prices generate additional rounds of selling. This framework enables us to understand and compare models relevant to distress selling from diverse literatures. The paper also considers what policy options are available at each stage to mitigate the adverse economic consequences of distress selling and asset market feedback.

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Bibliographic Info

Paper provided by Bank for International Settlements in its series BIS Working Papers with number 229.

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Length: 55 pages
Date of creation: Jun 2007
Date of revision:
Handle: RePEc:bis:biswps:229

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Keywords: Financial distress; distress selling; asset market feedback; banking crises; financial instability;

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References

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Citations

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Cited by:
  1. Philip Turner, 2012. "Weathering financial crisis: domestic bond markets in EMEs," BIS Papers chapters, in: Bank for International Settlements (ed.), Weathering financial crises: bond markets in Asia and the Pacific, volume 63, pages 15-34 Bank for International Settlements.
  2. Claudio Borio, 2011. "Rediscovering the macroeconomic roots of financial stability policy: journey, challenges and a way forward," BIS Working Papers 354, Bank for International Settlements.
  3. von Peter, Goetz, 2009. "Asset prices and banking distress: A macroeconomic approach," Journal of Financial Stability, Elsevier, vol. 5(3), pages 298-319, September.

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