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  • October 22, 2012
  • Article

Interest Rate Pass-Through: Mortgage Rates, Household Consumption, and Voluntary Deleveraging

By: Marco Di Maggio, Amir Kermani, Benjamin Keys, Tomasz Piskorski, Rodney Ramcharan, Amit Seru and Vincent Yao
Exploiting variation in the timing of resets of adjustable-rate mortgages (ARMs), we find that a sizable decline in mortgage payments (up to 50%) induces a significant increase in car purchases (up to 35%). This effect is attenuated by voluntary deleveraging. Borrowers... View Details
Keywords: Monetary Policy; Household Finance; Refinancing; Contract Rigidities; Debt Rigidity; MPC; Deleveraging; Personal Finance; Household; Policy; Borrowing and Debt; Macroeconomics
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  • 22 Jul 2013
  • News

Massive Deleveraging Suffocating Job Growth

  • 12 Apr 2013
  • News

Deleveraging in the U.S. Just Started

  • May 2020
  • Article

How Quantitative Easing Works: Evidence on the Refinancing Channel

By: Marco Di Maggio, Amir Kermani and Christopher Palmer
We document the transmission of large-scale asset purchases by the Federal Reserve to the real economy using rich borrower-linked mortgage-market data and an identification strategy based on mortgage market segmentation. We find that central bank QE1 MBS purchases... View Details
Keywords: Monetary Policy; MBS; Quantitative Easing; LSAP; Refinancing; Deleveraging; HARP; GSE; Central Banking; Global Range; Financing and Loans; Credit; United States
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  • 07 Jan 2013
  • News

Are the Country’s Best Years Behind Us?

  • 09 Mar 2012
  • News

Rome Looks to Italian Families to Fund Its Debt

  • January 2023 (Revised January 2024)
  • Case

Digital Transformation at Tata Steel

By: Krishna Palepu, Das Narayandas, Radhika Kak and Rachna Tahilyani
T.V. Narendran, CEO of Tata Steel, India’s oldest steel manufacturing firm, had taken concrete business and cultural transformation steps to future-ready the firm since taking over in 2013. He had deleveraged and instilled financial discipline, acquired new businesses,... View Details
Keywords: Digital Transformation; Digital Strategy; Change Management; Growth and Development Strategy; E-commerce; Steel Industry; Asia; India
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  • 10 Dec 2012
  • Working Paper Summaries

Vulnerable Banks

Keywords: by Robin Greenwood, Augustin Landier & David Thesmar; Banking; Financial Services
  • September 2017 (Revised August 2018)
  • Case

The Productivity Decline: Demographics, Robots, or Globalization?

By: Laura Alfaro, Hayley Pallan and Sarah Jeong
In the early 21st century, there was a noticeable trend of declining productivity growth. Despite the persistent decline in productivity growth, a consensus on its explanation had not been reached. Some of the debate focused on the technicalities of productivity... View Details
Keywords: Productivity; Performance Productivity; Measurement and Metrics; Technological Innovation; Economic Slowdown and Stagnation; Globalization; Business and Government Relations
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  • 2022
  • Working Paper

High-Yield Debt Covenants and Their Real Effects

By: Falk Bräuning, Victoria Ivashina and Ali Ozdagli
High-yield debt including leveraged loans is characterized by incurrence financial covenants, or “cov-lite” provisions. A traditional loan agreement includes maintenance covenants, which require continuous compliance with the covenant threshold, and their violation... View Details
Keywords: Debt Covenants; Incurrence Covenants; Borrowing and Debt; Banks and Banking
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  • September 2017
  • Teaching Note

The Productivity Decline: Demographics, Robots, or Globalization?

By: Laura Alfaro and Hayley Pallan
In the early 21st century, there was a noticeable trend of declining productivity growth. Despite the persistent decline in productivity growth, a consensus on its explanation had not been reached. Some of the debate focused on the technicalities of productivity... View Details
Keywords: Performance Productivity; Measurement and Metrics; Technological Innovation; Economic Slowdown and Stagnation; Globalization; Business and Government Relations
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  • 2009
  • Working Paper

Systemic Risk and the Refinancing Ratchet Effect

By: Amir E. Khandani, Andrew W. Lo and Robert C. Merton
The confluence of three trends in the U.S. residential housing market—rising home prices, declining interest rates, and near-frictionless refinancing opportunities—led to vastly increased systemic risk in the financial system. Individually, each of these trends is... View Details
Keywords: Housing; Mortgages; Risk and Uncertainty; Value; Mathematical Methods; Real Estate Industry; United States
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  • 2009
  • Working Paper

Systemic Risk and the Refinancing Ratchet Effect

By: Amir E. Khandani, Andrew W. Lo and Robert C. Merton
The confluence of three trends in the U.S. residential housing market-rising home prices, declining interest rates, and near-frictionless refinancing opportunities-led to vastly increased systemic risk in the financial system. Individually, each of these trends is... View Details
Keywords: Equity; Mortgages; Interest Rates; Price; Housing; Risk and Uncertainty; United States
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  • 2025
  • Working Paper

Bank Capital and the Growth of Private Credit

By: Sergey Chernenko, Robert Ialenti and David Scharfstein
We show that business development companies (BDCs)—closed-end funds that provide a significant share of nonbank loans to middle market firms—are very well capitalized according to bank capital frameworks. They have median risk-based capital ratios of about 36%... View Details
Keywords: Financing and Loans; Capital; Credit; Financial Institutions
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    Bank Capital and the Growth of Private Credit

    We show that business development companies (BDCs)—closed-end funds that provide a significant share of nonbank loans to middle market firms—are very well capitalized according to bank capital frameworks. They have median risk-based capital ratios of about 36% and,... View Details
    • Web

    Research - Behavioral Finance & Financial Stability

    Greenwood, Landier, and Thesmar present a model that estimates how the effects of fire-sales accumulate across banks and the degree to which individual banks are susceptible to deleveraging by their counterparts. In addition, they explore... View Details
    • 10 Aug 2011
    • Research & Ideas

    HBS Faculty Views on Debt Crisis

    can we deleverage our government and still foster growth in the economy? This downgrade is unlikely to have a material negative impact on Treasury rates, at least in the short run. The real danger is to the psychology of businesses and... View Details
    Keywords: by Staff
    • 06 Dec 2011
    • Op-Ed

    Greater Fiscal Integration Best Solution for Euro Crisis

    deleveraging that made them sell European sovereign debt. But the ECB's most powerful weapon - intervening in the bond market - is still locked away. Draghi needs to create consensus among the German "hawks" who worry about the... View Details
    Keywords: by Dante Roscini
    • 21 Nov 2017
    • First Look

    First Look at New Research and Ideas, November 21, 2017

    Interest Rate Pass-Through: Mortgage Rates, Household Consumption, and Voluntary Deleveraging By: Di Maggio, Marco, Amir Kermani, Benjamin Keys, Tomasz Piskorski, Rodney Ramcharan, Amit Seru, and Vincent Yao Abstract—Exploiting variation... View Details
    Keywords: Sean Silverthorne
    • 23 Jan 2018
    • First Look

    First Look at New Research and Ideas, January 23, 2018

    was the result of deleveraging and the post-Global Financial Crisis period, a mere cyclical phase. Distilling the sources and drivers of productivity decline was further complicated by the rise in economic integration across countries,... View Details
    Keywords: Sean Silverthorne