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Discussion Paper

Fire-Sale Vulnerabilities of Banks: Bank-Specific Risks under Stress and Credit Drawdowns


Abstract: One channel of shock propagation in the financial system is fire-sale-driven spillover that can take place through asset fire sales and the resulting effect of depressed asset prices on the value of firms' assets. Heightened leverage then induces firms to de-lever, triggering another round of asset fire sales.

https://doi.org/10.17016/2380-7172.2589

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File(s): File format is text/html https://www.federalreserve.gov//econres/notes/feds-notes/fire-sale-vulnerabilities-of-banks-bank-specific-risks-under-stress-and-credit-drawdowns-20201008.htm

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Bibliographic Information

Provider: Board of Governors of the Federal Reserve System (U.S.)

Part of Series: FEDS Notes

Publication Date: 2020-10-08

Number: 2020-10-08