The recent financial crisis has shown that short-term collateralized borrowing may be a
highly unstable source of funds in times of stress. In this paper, we develop a dynamic …

In an open market operation, the central bank swaps currency for bonds. We show how
injecting money in this way is different from transfers, the way policy is usually formulated …

Derivatives enjoy special status in bankruptcy: they are exempt from the automatic stay and
effectively senior to virtually all other claims. We propose a corporate finance model to …

We show that repurchase agreements (repos) arise as the instrument of choice to borrow in
a competitive model with limited commitment. The repo contract traded in equilibrium …

We use a new panel data set on intraday transactions of triparty repos (TPR) to study trading
relationships in the over-the-counter market. We test the prediction that search frictions lead …

This paper examines the role of collateral in the financial system, with special emphasis on
the implications for financial stability and the conduct of monetary policy. First, we review …

We examine the desirability of granting “safe harbor” provisions to creditors of financial
intermediaries in sale-and-repurchase (repo) contracts. Exemption from an automatic stay in …

This paper studies the risk of “fire sales” in the tri‐party repo market, a large and important
market where securities dealers find short‐term funding for a substantial portion of their own …

Many debt claims, such as bonds, are resaleable; others, such as repos, are not. There was
a fivefold increase in repo borrowing before the 2008–2009 financial crisis. Why? Did banks' …

This paper studies the optimal clearing arrangement for bilateral financial contracts in which
an assessment of counterparty credit risk is crucial for efficiency. The economy is populated …