Title

Asset Transfers and Self-Fulfilling Runs

Author(s)

Jonathan Payne Jonathan Payne (Princeton University)

Joshua Weiss Joshua Weiss (New York University)

Abstract

We introduce a new mechanism that eliminates self-fulfilling runs on a Diamond Dybvig intermediary. If a depositor wants to end their relationship with the intermediary early, they can withdraw goods or take ownership of unliquidated assets from the intermediary's balance sheet. We interpret this mechanism as a repo contract or a bankruptcy plan. What frictions prevent intermediaries from transferring assets to depositors? High transaction costs and within-intermediary idiosyncratic return risk. Our results are robust to the introduction of an asset market with adverse selection.

Creation Date

2020-05

Section URL ID

Paper Number

2020-42

URL

https://drive.google.com/file/d/1gBWtYPRl3VcObaJ0HdnK0SWdXurGSUkm/view

File Function

Jel

G21, H12

Keyword(s)

self-fulfilling runs, asset transfer

Suppress

false

Series

13