FRIC/Finance Seminar with Olivier Darmouni, Columbia Business School

On March 17, 2017 Olivier Darmouni will present "Estimating Informational Frictions in Sticky Relationships"

Friday, March 17, 2017 - 11:00 to 12:15

FRIC Center for Financial Frictions and the Department of Finance are proud to announce the upcoming seminar with Olivier Darmouni, Columbia Business School.

Olivier Darmouni will present

Estimating Informational Frictions in Sticky Relationships

ABSTRACT
This paper introduces a novel empirical approach to estimate the effects of an informational friction limiting the reallocation of credit after a shock to banks. Because lenders rely on private information when deciding which relationship to end, borrowers looking for a new lender are adversely selected. I show how to identify private information separately from information common to all lenders, but unobservable to the econometrician, by using bank shocks within a discrete-choice model of relationships. Applying this approach to the U.S. corporate loan market during the recent crisis, this informational friction can explain 10% of the decrease in lending.

Location:
Solbjerg Plads 3, 2000 Frederiksberg
Room: SPs03

The page was last edited by: Department of Finance // 03/15/2017