Cover IMF Working Papers
The Effect of Leverage on Asset Sales Between Financial Institutions
Author: Miss Sonali Das
Series:
IMF Working Papers
Volume/Issue:
Volume 2017: Issue 200
Language:
English
Publication Date:
08 Sep 2017
DOI:
https://doi.org/10.5089/9781484318171.001
ISBN:
9781484318171
ISSN:
1018-5941
Pages:
17
Keywords:
WP; asset; buyer; capital; value; Asset sales; financial intermediaries; balance sheets; leverage; deal value; buyer asset growth; asset-market liquidity; buyer assets; buyer market assets; assets ratio; buyer log; asset liquidation; property assets; Capital adequacy requirements; Asset valuation; Agroindustries; Stock markets; Asset management; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper analyzes how the leverage of financial institutions affects their demand for assets and the resulting value of transactions between financial institutions. The results show a positive relationship between buyer capital and the likelihood of buying assets, and between buyer capital and the value of the deal. That is, those institutions that are the least constrained in their ability to raise funding are those that demand assets and pay more for them. This result does not hold, however, for deposit-taking institutions that had access to several government programs designed to improve their liquidity position during the crisis of 2008.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund