IMF Working Papers

The Effect of Leverage on Asset Sales Between Financial Institutions

By Sonali Das

September 8, 2017

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Format: Chicago

Sonali Das. The Effect of Leverage on Asset Sales Between Financial Institutions, (USA: International Monetary Fund, 2017) accessed October 7, 2024

Disclaimer: 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.

Summary

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.

Subject: Agroindustries, Asset and liability management, Asset management, Asset valuation, Capital adequacy requirements, Economic sectors, Financial markets, Financial regulation and supervision, Stock markets

Keywords: Agroindustries, Asset, Asset liquidation, Asset management, Asset sales, Asset valuation, Asset-market liquidity, Assets ratio, Balance sheets, Buyer, Buyer asset growth, Buyer assets, Buyer log, Buyer market assets, Capital, Capital adequacy requirements, Deal value, Financial intermediaries, Global, Leverage, Property assets, Stock markets, Value, WP

Publication Details

  • Pages:

    17

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2017/200

  • Stock No:

    WPIEA2017200

  • ISBN:

    9781484318171

  • ISSN:

    1018-5941