【Brownbag】Lender Concentration and Sudden Stops

  • 研討會日期 : 2022-11-25
  • 時間 : 11:30
  • 主講人 : Professor Chun-Che Chi (紀鈞哲)
  • 註冊 : Link
  • 地點 : Conference room B110
  • 演講者簡介 : Professor Chun-Che Chi received his Ph.D. in Economics from Columbia University in 2020. He is currently an Assistant Research Fellow at Institute of Economics, Academia Sinica. His research interests are international macroeconomics, monetary economics, and finance.
  • 演講摘要 : This paper studies how lender structure affects credit conditions in open economies via a model with lenders of different sizes. Unlike atomic lenders who foreclose on all collateral when borrowers default, large lenders internalize the pecuniary externality whereby selling seized collateral injects supply and reduces the collateral price. Thus, a more concentrated lender structure alleviates the severity of sudden stops via a higher collateral price, thus demanding less precautionary saving by decentralized borrowers and increasing overborrowing. I document that the lender structure of the external debt of emerging countries is more concentrated than that of advanced countries, and thus emerging countries tend to overborrow. This explains overborrowing alternative to the pecuniary externality of borrowers often highlighted in the literature. Under plausible parameterization, the size of the pecuniary externality internalized by lenders is one-third of that internalized by borrowers. Finally, allowing lender countries to choose lender structure optimally will increase lender concentration, raising debts and lowering borrowers’ consumption by 3.5%.