{
  "title": "The Effect of Leverage on Asset Sales Between Financial Institutions",
  "publication": "IMF Working Papers, September 8, 2017",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2017/09/08/the-effect-of-leverage-on-asset-sales-between-financial-institutions-45207",
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  "summary": "This paper analyzes how the leverage of financial institutions affects their demand for assets and the resulting value of transactions between financial institutions.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Author: Sonali Das  \n- Publication date: September 8, 2017  \n- Series: Working Paper No. 2017/200  \n- Summary: This paper analyzes how the leverage of financial institutions affects their demand for assets and the resulting value of transactions between financial institutions."
    },
    {
      "heading": "Key Findings",
      "content": "- There is a positive relationship between buyer capital and the likelihood of buying assets.\n- There is a positive relationship between buyer capital and the value of the deal.\n- Institutions that are the least constrained in their ability to raise funding are those that demand assets and pay more for them.\n- The positive relationship between buyer capital and asset purchases/value does not hold for deposit-taking institutions that had access to several government programs designed to improve their liquidity position during the crisis of 2008."
    },
    {
      "heading": "Empirical Results and Scope",
      "content": "- Focus: effect of leverage on demand for assets and transaction values between financial institutions.\n- Contextual note: the result is conditional on institution type; deposit-taking institutions with government program access during the 2008 crisis behave differently.\n- Subjects and coverage: Agroindustries, Asset and liability management, Asset management, Asset valuation, Capital adequacy requirements, Economic sectors, Financial markets, Financial regulation and supervision, Stock markets.\n- Keywords preserved from the source: 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."
    },
    {
      "heading": "Policy Implications and Interpretation",
      "content": "- Funding capacity of buyers (buyer capital) is a key determinant of both their propensity to purchase assets and the prices they are willing to pay.\n- Government liquidity-support programs for deposit-taking institutions can alter the standard leverage–asset demand relationship observed among other financial institutions.\n- Consideration of institution-type and access to public support is important when assessing market liquidity and pricing dynamics in stressed periods.\n\n---\n\n Content in this bundle\n\n- The Effect of Leverage on Asset Sales Between Financial Institutions, WP/17/200, September 2017\n  - The Effect of Leverage on Asset Sales Between Financial Institutions, WP/17/200, September 2017 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - The Effect of Leverage on Asset Sales Between Financial Institutions, WP/17/200, September 2017 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2017/09/08/the-effect-of-leverage-on-asset-sales-between-financial-institutions-45207"
    }
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    "Authors: Sonali Das",
    "Published: September 8, 2017",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781484318171.001",
    "Author: Sonali Das",
    "Publication date: September 8, 2017",
    "Series: Working Paper No. 2017/200",
    "Summary: This paper analyzes how the leverage of financial institutions affects their demand for assets and the resulting value of transactions between financial institutions.",
    "There is a positive relationship between buyer capital and the likelihood of buying assets.",
    "There is a positive relationship between buyer capital and the value of the deal.",
    "Institutions that are the least constrained in their ability to raise funding are those that demand assets and pay more for them.",
    "The positive relationship between buyer capital and asset purchases/value does not hold for deposit-taking institutions that had access to several government programs designed to improve their liquidity position during the crisis of 2008.",
    "Focus: effect of leverage on demand for assets and transaction values between financial institutions.",
    "Contextual note: the result is conditional on institution type; deposit-taking institutions with government program access during the 2008 crisis behave differently.",
    "Subjects and coverage: Agroindustries, Asset and liability management, Asset management, Asset valuation, Capital adequacy requirements, Economic sectors, Financial markets, Financial regulation and supervision, Stock markets.",
    "Keywords preserved from the source: 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.",
    "Funding capacity of buyers (buyer capital) is a key determinant of both their propensity to purchase assets and the prices they are willing to pay.",
    "Government liquidity-support programs for deposit-taking institutions can alter the standard leverage–asset demand relationship observed among other financial institutions.",
    "Consideration of institution-type and access to public support is important when assessing market liquidity and pricing dynamics in stressed periods.",
    "**The Effect of Leverage on Asset Sales Between Financial Institutions, WP/17/200, September 2017**"
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