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Discussion Paper
Assisting Firms during a Crisis: Benefits and Costs
Wall, Larry D. (2020-08-10)
Public and private efforts to reduce COVID-19 infection levels have led to a sharp drop in economic activity around the world. In an attempt to mitigate the damage to businesses, governments around the world have implemented a variety of financial programs to help firms. These programs have been criticized as interfering with markets, providing bailouts, and creating adverse incentives. In this article, I review both the rationale for government-provided assistance and the costs of providing that assistance from the perspective of how that aid effects the likely level and volatility of ...
Policy Hub* , Paper 2020-10

Journal Article
So Far, So Good: Government Insurance of Financial Sector Tail Risk
Wall, Larry D. (2021-11-08)
The US government has intervened to provide extraordinary support 16 times from 1970 to 2020 with the goal of preventing or mitigating (or both) the cost of financial instability to the financial sector and the real economy. This article discusses the motivation for such support, reviewing the instances where support was provided, along with one case where it was expected but not provided. The article then discusses the moral hazard and fiscal risks posed by the government's insurance of the tail risk along with ways to reduce the government's risk exposure.
Policy Hub , Volume 2021 , Issue 13

Journal Article
Assisting Firms during a Crisis: Benefits and Costs
Wall, Larry D. (2020-08-10)
Public and private efforts to reduce COVID-19 infection levels have led to a sharp drop in economic activity around the world. In an attempt to mitigate the damage to businesses, governments around the world have implemented a variety of financial programs to help firms. These programs have been criticized as interfering with markets, providing bailouts, and creating adverse incentives. In this article, I review both the rationale for government-provided assistance and the costs of providing that assistance from the perspective of how that aid effects the likely level and volatility of ...
Policy Hub , Volume 2020 , Issue 10 , Pages 18

Working Paper
Industrial Policy and Capital Misallocation in Exporting
Kabir, Poorya; Müller, Karsten; Matray, Adrien; Xu, Chenzi (2026-08-24)
Trade financing through export credit agencies is a key tool of modern industrial policy. We provide a theory to evaluate its welfare effects, and we study its causal impact on trade, firm investment, and capital misallocation by using the effective shutdown of the US export credit agency from 2015 to 2019 as a natural experiment. First, we show that the US Export-Import Bank (EXIM) has large causal effects: comparing industries exposed and unexposed to the shutdown, we find that exposed industries experience a product-level export reduction of approximately $4.49 for each $1 lost in EXIM ...
FRB Atlanta Working Paper , Paper 2026-12

Working Paper
Bailing Out (Firms') Uninsured Deposits: A Quantitative Analysis
Pancost, N. Aaron; Robatto, Roberto (2026-09-28)
We document two novel stylized facts about uninsured deposits and bank failures: (i) firms hold more uninsured deposits than households, and (ii) uninsured depositors do not suffer losses in 94 percent of bank failures. We construct a quantitative general equilibrium model designed around these facts. We characterize the marginal benefits of increased insurance for firms' and households' deposits separately, finding higher benefits for household insurance. Quantitatively, the welfare gains from increasing insurance arise primarily from the reduction in bank runs driven by the higher limit on ...
FRB Atlanta Working Paper , Paper 2026-16

Working Paper
Leverage over the Firm Life Cycle, Firm Growth, and Aggregate Fluctuations
Hyatt, Henry; Kalemli-Özcan, Ṣebnem; Dinlersoz, Emin M.; Penciakova, Veronika (2019-11-01)
We study the leverage of U.S. firms over their life cycles and the connection between firm leverage, firm growth, and aggregate shocks. We construct a new dataset that combines private and public firms' balance sheets with firm-level data from U.S. Census Bureau's Longitudinal Business Database for the period 2005-12. Public and private firms exhibit different leverage dynamics over their life cycles. Firm age and size are systematically related to leverage for private firms but not for public firms. We show that private firms, but not public ones, deleveraged during the Great Recession and ...
FRB Atlanta Working Paper , Paper 2019-18

Working Paper
A Critical Review of the Common Ownership Literature
Gerardi, Kristopher; Lowry, Michelle; Schenone, Carola (2023-11-08)
The rapid growth in index funds and significant consolidation in the asset-management industry over the past few decades has led to higher levels of common ownership and increased attention on the topic by academic researchers. A consensus has yet to emerge from the literature regarding the consequences of increased common ownership on firm behavior and market outcomes. Given the potential implications for firms and investors alike, it is perhaps not surprising that policymakers, legal scholars, finance and accounting academics, and practitioners have all taken a keen interest in the subject. ...
FRB Atlanta Working Paper , Paper 2023-17

Working Paper
Zombie Lending to U.S. Firms
Favara, Giovanni; Pérez-Orive, Ander; Minoiu, Camelia (2024-08-15)
We show that U.S. banks do not engage in zombie lending to firms of deteriorating profitability, irrespective of capital levels and exposure to such firms. In contrast, unregulated financial intermediaries do, originating more and cheaper loans to these firms. We establish these results using supervisory data on firm-bank relationships, syndicated lending data for banks and nonbanks, and an empirical setting with quasi-random shocks to firm profitability. Although credit migrates from banks to nonbanks, zombie firms file for bankruptcy at an elevated rate, suggesting that nonbanks’ zombie ...
FRB Atlanta Working Paper , Paper 2024-7

Working Paper
Screen More, Sell Later: Screening and Dynamic Signaling in the Mortgage Market
Wei, Bin; Adelino, Manuel; Zhao, Feng (2025-04-16)
In dynamic models of asset markets with asymmetric information and endogenous screening, the anticipation of signaling through delayed sales incentivizes originators to exert greater effort ex ante. A central prediction in those models is a positive relationship between screening effort and the delay of sale. We test this theoretical prediction using the mortgage market as a laboratory, with processing time serving as a measure of screening effort. In line with the theory, mortgage processing time and the delay of sale after origination are strongly positively related in the data. Both ...
FRB Atlanta Working Paper , Paper 2025-3

Report
Early Warning Signals in Private Credit? What BDC Portfolios Reveal about Emerging Risks
Shen, Leslie Sheng; Wang, J. Christina; Fillat, José (2026-08-05)
Private credit—lending by nonbank financial institutions—has grown to over $1 trillion in the United States, yet most of it remains opaque to investors and policymakers because private credit funds are not required to publish their holdings. Business development companies (BDCs) are an exception and provide a window into this segment of the credit markets. All BDCs are publicly registered investment vehicles that must file periodic reports with the Securities and Exchange Commission, including quarterly and annual filings. We analyze these disclosures to detect trends in the pricing of ...
Current Policy Perspectives , Paper 26-6

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