Minimal Settlement Assets in Economies with Interconnected Financial Obligations

B-Tier
Journal: Journal of Money, Credit, and Banking
Year: 2011
Volume: 43
Issue: 1
Pages: 81-108

Score contribution per author:

2.011 = (α=2.01 / 1 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

A model is developed where firms belonging to a group are obliged to make payments to one another by using a liquid asset. The paper studies the exogenous endowments of this asset that are necessary to assure that all obligations are met. Conditions are presented under which the degree to which firms are interconnected (so that each creditor has more debtors and each debtor has more creditors) increases the number of firms that must be endowed with the liquid asset. Interconnectedness then makes payment defaults more likely. By acquiring too many payment obligations, firms may also become too interconnected.

Technical Details

RePEc Handle
repec:wly:jmoncb:v:43:y:2011:i:1:p:81-108
Journal Field
Macro
Author Count
1
Added to Database
2026-01-29