IDEAS home Printed from https://ideas.repec.org/p/ter/wpaper/00202.html

Banking Structures, Liquidity, and Macroeconomic Stability

Author

Listed:
  • Luis Araujo
  • Elton Beqiraj
  • David Hong
  • Sotirios Kokas
  • Raoul Minetti

Abstract

Banking is increasingly a complex activity, with financial institutions cooperating in borrowers' financing and monitoring. We study an economy where banks use information to screen investment quality and to recover collateral from investments. Complex banking, defined as lenders' joint production of information on borrowers, eases the salvage of investments but also facilitates the disclosure of investments' fragility. We find that complex banking can be a source of significant macroeconomic non-linearities: it enhances the resilience to small aggregate shocks but can precipitate a crisis following large negative shocks. The predictions of the model are consistent with evidence from matched bank-firm US data.

Suggested Citation

  • Luis Araujo & Elton Beqiraj & David Hong & Sotirios Kokas & Raoul Minetti, 2026. "Banking Structures, Liquidity, and Macroeconomic Stability," CIMEO Working Paper Series 202, Centre for Investigation and Modelling of Experimental Observations (CIMEO).
    • Handle: RePEc:ter:wpaper:00202
    as

    Download full text from publisher

    File URL: https://www.dipecodir.it/wpcom/data/wp_no_202_2026.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Amir Sufi, 2007. "Information Asymmetry and Financing Arrangements: Evidence from Syndicated Loans," Journal of Finance, American Finance Association, vol. 62(2), pages 629-668, April.
    2. Steven D. Levitt & John A. List & Chad Syverson, 2013. "Toward an Understanding of Learning by Doing: Evidence from an Automobile Assembly Plant," Journal of Political Economy, University of Chicago Press, vol. 121(4), pages 643-681.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Luis Araujo & Elton Beqiraj & David Hong & Sotirios Kokas & Raoul Minetti, 2026. "Banking Structures, Liquidity, and Macroeconomic Stability," Working Papers in Public Economics 269, Department of Economics and Law, Sapienza University of Rome.
    2. Fogel, Kathy & Jandik, Tomas & McCumber, William R., 2018. "CFO social capital and private debt," Journal of Corporate Finance, Elsevier, vol. 52(C), pages 28-52.
    3. Stolowy, Hervé & Jeanjean, Thomas & Erkens, Michael, 2011. "The economic consequences of increasing the international visibility of financial reports," HEC Research Papers Series 957, HEC Paris.
    4. Todd D. Gerarden & Richard G. Newell & Robert N. Stavins, 2025. "Assessing the Energy-Efficiency Gap," World Scientific Book Chapters, in: Economics of Environment, Climate Change, and Wine Selected Papers of Robert N Stavins Volume 3 (2011–2023), chapter 4, pages 53-118, World Scientific Publishing Co. Pte. Ltd..
    5. Champagne, Claudia, 2014. "The international syndicated loan market network: An “unholy trinity”?," Global Finance Journal, Elsevier, vol. 25(2), pages 148-168.
    6. Gordon L Clark & Ashby H B Monk, 2014. "The Geography of Investment Management Contracts: The UK, Europe, and the Global Financial Services Industry," Environment and Planning A, , vol. 46(3), pages 531-549, March.
    7. Jens Hagendorff & Sonya Lim & Duc Duy Nguyen, 2023. "Lender Trust and Bank Loan Contracts," Management Science, INFORMS, vol. 69(3), pages 1758-1779, March.
    8. Yanyi Ye & Yun Wang & Xiaoguang Yang, 2022. "Bank loan information and information asymmetry in the stock market: evidence from China," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-28, December.
    9. Alan P. Kwan & S. Alex Yang & Angela Huyue Zhang, 2024. "Crowd-Judging on Two-Sided Platforms: An Analysis of In-Group Bias," Management Science, INFORMS, vol. 70(4), pages 2459-2476, April.
    10. Arnold, M., 2017. "The impact of central clearing on banks’ lending discipline," Journal of Financial Markets, Elsevier, vol. 36(C), pages 91-114.
    11. Zunian Luo, 2022. "Cap or No Cap? What Can Governments Do to Promote EV Sales?," Papers 2212.08137, arXiv.org.
    12. Jong Chool Park & Qiang Wu, 2009. "Financial Restatements, Cost of Debt and Information Spillover: Evidence From the Secondary Loan Market," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 36(9‐10), pages 1117-1147, November.
    13. Wenlian Gao & Feifei Zhu & Kai Chen, 2023. "The role of bank lenders in firm leverage adjustments," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 46(1), pages 63-97, February.
    14. Gong, Di, 2015. "Essays on banking and financial innovation," Other publications TiSEM 9f8c23b7-7139-4cc6-be80-4, Tilburg University, School of Economics and Management.
    15. Matthew Plosser & João A. C. Santos, 2014. "Banks' incentives and the quality of internal risk models," Staff Reports 704, Federal Reserve Bank of New York.
    16. Hongmei Wen & Xin Sui & Shaopeng Lu, 2022. "Study on Effect of Consumer Information in Personal Credit Risk Evaluation," Complexity, John Wiley & Sons, vol. 2022(1).
    17. Ryan Ball & Robert M. Bushman & Florin P. Vasvari, 2008. "The Debt‐Contracting Value of Accounting Information and Loan Syndicate Structure," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 46(2), pages 247-287, May.
    18. Qiu, Jiaping & Yu, Fan, 2012. "Endogenous liquidity in credit derivatives," Journal of Financial Economics, Elsevier, vol. 103(3), pages 611-631.
    19. Mukherjee, Arka & Carvalho, Margarida, 2021. "Dynamic decision making in a mixed market under cooperation: Towards sustainability," International Journal of Production Economics, Elsevier, vol. 241(C).
    20. Bassi, Vittorio & Nyshadham, Anant & Tamayo, Jorge & Adhvaryu, Achyuta, 2020. "No Line Left Behind: Assortative Matching Inside the Firm," CEPR Discussion Papers 14554, Centre for Economic Policy Research.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ter:wpaper:00202. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Giovanni Di Bartolomeo (email available below). General contact details of provider: https://edirc.repec.org/data/cmrosit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.