MARC Record from Library of Congress

LEADER: 02488cam a22002897a 4500
001 2008611015
003 DLC
005 20080815090859.0
007 cr |||||||||||
008 080808s2008 mau sb 000 0 eng
010 $a 2008611015
040 $aDLC$cDLC
050 00 $aHB1
100 1 $aTong, Hui.
245 10 $aReal effects of the subprime mortgage crisis$h[electronic resource] :$bis it a demand or a finance shock? /$cHui Tong, Shang-Jin Wei.
260 $aCambridge, MA :$bNational Bureau of Economic Research,$cc2008.
490 1 $aNBER working paper series ;$vworking paper 14205
538 $aSystem requirements: Adobe Acrobat Reader.
538 $aMode of access: World Wide Web.
500 $aTitle from PDF file as viewed on 8/8/2008.
530 $aAlso available in print.
504 $aIncludes bibliographical references.
520 3 $a"We develop a methodology to study whether and how a financial-sector crisis can spill over to the real economy, and apply it to the case of the ongoing subprime mortgage crisis. If there is a spillover, does it manifest itself primarily by reducing consumer confidence and consumer demand? Is there also a supply-side channel through a tightened liquidity constraint faced by non-financial firms? Since most firms appear to have much larger cash holdings than in the past, some suggest that a liquidity constraint is not likely to be a significant factor for non-financial firms. We propose a methodology to estimate the importance of these two channels for spillovers. We first propose an index of a firm's sensitivity to a shock to consumer confidence, based on its response to the 9/11 shock in 2001. We then construct a separate firm-level index on financial constraint based on Whited and Wu (2006). As a robustness check, we also construct an alternative sector-level index of a firm's intrinsic demand for external finance, based on the work of Rajan and Zingales (1998). We find robust evidence suggesting that both channels are at work, but that a tightened liquidity squeeze appears to be economically more important than reduced consumer confidence or spending in explaining cross-firm differences in stock price declines"--National Bureau of Economic Research web site.
700 1 $aWei, Shang-Jin.
710 2 $aNational Bureau of Economic Research.
830 0 $aWorking paper series (National Bureau of Economic Research : Online) ;$vworking paper no. 14205.
856 40 $uhttp://papers.nber.org/papers/w14205