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"We develop a model of endogenous maturity structure for financial institutions that borrow from multiple creditors. We show that a maturity rat race can occur: an individual creditor can have an incentive to shorten the maturity of his own loan to the institution, allowing him to adjust his financing terms or pull out before other creditors can. This, in turn, causes all other lenders to shorten their maturity as well, leading to excessively short-term financing. This rat race occurs when interim information is mostly about the probability of default rather than the recovery in default, and is most pronounced during volatile periods and crises. Overall, firms are exposed to unnecessary rollover risk"--National Bureau of Economic Research web site

An incisive overview of the macroeconomics of financial crises—essential reading for students and policy experts alikeWith alarming frequency, modern economies go through macro-financial crashes that arise from the financial sector and spread to the broader economy, inflicting deep and prolonged recessions. A Crash Course on Crises brings together the latest cutting-edge economic research to identify the seeds of these crashes, reveal their triggers and consequences, and explain what policymakers can do about them.Each of the book's ten self-contained chapters introduces readers to a key economic force and provides case studies that illustrate how that force was dominant. Markus Brunnermeier and Ricardo Reis show how the run-up phase of a crisis often occurs in ways that are preventable but that may go unnoticed and discuss how debt contracts, banks, and a search for safety can act as triggers and amplifiers that drive the economy to crash. Brunnermeier and Reis then explain how monetary, fiscal, and exchange-rate policies can respond to crises and prevent them from becoming persistent.With case studies ranging from Chile in the 1970s to the COVID-19 pandemic, A Crash Course on Crises synthesizes a vast literature into ten simple, accessible ideas and illuminates these concepts using novel diagrams and a clear analytical framework

Introduction / Markus Brunnermeier and Arvind Krishnamurthy -- Measurement and disclosure. Challenges in identifying and measuring systemic risk / Lars Peter Hansen ; Regulating systemic risk through transparency: tradeoffs in making data public / Augustin Landier and David Thesmar -- Risk exposures. Systemic risk exposures: a 10-by-10-by-10 approach / Darrell Duffie ; Remapping the flow of funds / Juliane Begenau, Monika Piazzesi and Martin Schneider ; Measuring margin / Robert L. Mcdonald ; A transparency standard for derivatives / Viral V Acharya -- Liquidity and leverage. Liquidity mismatch measurement / Markus Brunnermeier, Arvind Krishnamurthy, and Gary Gorton ; Monitoring leverage / John Geanakoplos and Lasse Heje Pedersen -- Financial intermediation and credit. Repo and securities lending / Tobias Adrian, Brian Begalle, Adam Copeland and Antoine Martin ; Improving our ability to monitor bank lending / William F. Bassett, Simon Gilchrist, Gretchen C. Weinbach, and Egon Zakrajek ; The case for a credit registry / Atif Mian -- Household sector. Monitoring the financial condition and expenditures of households / Robert E. Hall ; Leads on macroeconomic risks to and from the household sector / Jonathan A. Parker ; Detecting "bad" leverage / Amir Sufi -- Corporate sector. A macroeconomist's wish list of financial data / V.V. Chari -- International sector. Systemic risks in global banking: what available data can tell us and what more data are needed / Eugenio Cerutti, Stijn Claessens, and Patrick McGuire.