Jochen Mankart
Last Name
Mankart
First name
Jochen
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Item type:Publication, Personal Bankruptcy Law, Debt Portfolios, and Entrepreneurship(2012-07-02)Every year 400,000 entrepreneurs fail and 60,000 file for personal bankruptcy. The option to declare bankruptcy provides entrepreneurs with insurance against the financial consequences of business failures. However, it comes at the cost of worsened credit market conditions. In this paper, we construct a quantitative general equilibrium model of entrepreneurship to show that the presence of secured credit in addition to unsecured credit substantially alters the trade-off between insurance and credit conditions. A lenient bankruptcy law always worsens credit conditions, in particular for poor entrepreneurs. If secured credit is not available, their credit conditions are so bad that many prefer to become workers. In that case, we show that the optimal bankruptcy law is very harsh because the benefits from better credit conditions dominate the worsened insurance. However, if secured credit is available, entrepreneurs who might be rationed out of the unsecured credit market can still obtain secured credit. Therefore, they can run larger firms, which makes entrepreneurship more attractive. Since the presence of secured credit lowers the cost of a generous bankruptcy law, we find that the optimal law is lenient in this case: moving to the optimal bankruptcy law would increase entrepreneurship by more than four per cent.Type:discussion paperIssue:2012-16 - Some of the metrics are blocked by yourconsent settings
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Item type:Publication, Bank Portfolio Choice, Uninsurable Risks and Regulatory ConstraintsWe use individual U.S. commercial bank balance sheet and income statement information to develop stylized facts about bank portfolio choices in both the cross section and over time. We then estimate the structural parameters of a quantitative model of bank portfolio choices (new loans, liquid investments and endogenous failure) that are made in the presence of undiversi?able background risk (problem loans, interest rate spreads and deposit shocks) and regulatory constraints. The loan portfolio is highly procyclical and banks curtail new lending very aggressively in response to background risk shocks, such as a higher uncertainty in bad loans or deposits. Bank failures are strongly countercyclical and depend positively on leverage. Increasing equity requirements generates higher equity but also results in higher failures because the increase in equity is less than proportional to the increase in the leverage limit, whereas background risk remains the same.Type:working paper - Some of the metrics are blocked by yourconsent settings
Item type:Publication, Uninsurable Risks, Bank Defaults and Loan Supply(2013)We use individual U.S. commercial bank balance sheet information to develop stylized facts about bank behavior in both the cross section and over time. We then build a quant- itative model of bank behavior taking as exogenous inputs the aggregate and idiosyncratic components of problem loans, interest rate spreads and deposit shocks, seeking to under- stand decisions regarding new loans provision, access to wholesale funding and defaults. The model generates highly procyclical loan supply and banks can curtail new lending very ag- gressively in response to background risk shocks, such as an increase in bad loans. Bank failures, though, are strongly countercyclical. Relative to a baseline recession, in a reces- sion simultaneously accompanied by a temporary freeze in the money market, bank defaults increase by a factor of three and credit supply drops by 2.5 percentage points more.Type:working paper