Footnote:
In: Journal of Banking and Finance, Vol. 49, No. 12, 2014
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments September 1, 2014 erstellt
Description:
Should central banks lend against low quality collateral? We characterize efficient central bank collateral policy in a model where a bank borrows from the interbank market or the central bank. Collateral has favorable incentive effects but is costly to transfer to lenders who value the collateral less because of imperfect collateral quality. We show that a fall in the quantity or the quality of the bank's collateral can increase interest rates in the economy even with a constant policy rate. A looser central bank collateral policy can reduce the spread, alleviate the credit crunch and increase output