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Bank competition can induce excessive risk taking due to risk shifting. This paper tests this hypothesis using micro-level U.S. mortgage data by exploiting the exogenous variation in local house price volatility. The paper finds that, in response to high expected house price volatility, banks in U.S. counties with a competitive mortgage market lowered lending standards by twice as much as those with concentrated markets between 2000 and 2005. Such risk taking pattern was associated with real economic outcomes during the financial crisis, including higher unemployment rates in local real sectors.

Banks and Banking --- Finance: General --- Infrastructure --- Real Estate --- Industries: Financial Services --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financial Institutions and Services: Government Policy and Regulation --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Housing Supply and Markets --- General Financial Markets: General (includes Measurement and Data) --- Economic Development: Urban, Rural, Regional, and Transportation Analysis --- Housing --- Property & real estate --- Finance --- Banking --- Macroeconomics --- Housing prices --- Competition --- Prices --- Financial institutions --- Financial markets --- National accounts --- Loans --- Banks and banking --- Saving and investment --- United States

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We confirm the negative relationship between household debt and future GDP growth documented in Mian, Sufi, and Verner (2017) for a wider set of countries over the period 1950–2016. Three mutually reinforcing mechanisms help explain this relationship. First, debt overhang impairs household consumption when negative shocks hit. Second, increases in household debt heighten the probability of future banking crises, which significantly disrupts financial intermediation. Third, crash risk may be systematically neglected due to investors’ overoptimistic expectations associated with household debt booms. In addition, several institutional factors such as flexible exchange rates, higher financial development and inclusion are found to mitigate this impact. Finally, the tradeoff between financial inclusion and stability nuances downside risks to growth.

Taxation. --- Duties --- Fee system (Taxation) --- Tax policy --- Tax reform --- Taxation, Incidence of --- Taxes --- Finance, Public --- Revenue --- Banks and Banking --- Foreign Exchange --- Investments: Stocks --- Macroeconomics --- Money and Monetary Policy --- General Aggregative Models: Forecasting and Simulation --- Macroeconomics: Consumption --- Saving --- Wealth --- Business Fluctuations --- Cycles --- Financial Markets and the Macroeconomy --- Financial Crises --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Currency --- Foreign exchange --- Banking --- Investment & securities --- Monetary economics --- Exchange rate arrangements --- Consumption --- Commercial banks --- Stocks --- Conventional peg --- Financial institutions --- National accounts --- Consumer credit --- Money --- Economics --- Banks and banking --- United States

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Global investment to achieve the Paris Agreement’s temperature and adaptation goals requires immediate actions—first and foremost—on climate policies. Policies should be accompanied by commensurate financing flows to close the large financing gap globally, and in emerging market and developing economies (EMDEs) in particular. This note discusses potential ways to mobilize domestic and foreign private sector capital in climate finance, as a complement to climate-related policies, by mitigating relevant risks and constraints through public-private partnerships involving multilateral, regional, and national development banks. It also overviews the role the IMF can play in the process.

Climate change. --- Capital and Ownership Structure --- Civil service & public sector --- Climate change --- Climate finance --- Climate --- Climatic changes --- Corporate Finance and Governance --- Currency crises --- Economic & financial crises & disasters --- Economic Development: Financial Markets --- Economic sectors --- Economics of specific sectors --- Economics --- Economics: General --- Emissions trading --- Environment --- Environmental Economics --- Environmental economics --- Environmental Economics: General --- Environmental Economics: Government Policy --- Environmental management --- Finance, Public --- Finance: General --- Financial crises --- Financial Risk and Risk Management --- Financial services industry --- Financing Policy --- Foreign Exchange --- General Financial Markets: General (includes Measurement and Data) --- Global Warming --- Goodwill --- Governmental Loans, Loan Guarantees, Credits, and Grants --- Green finance / sustainable finance --- Informal Economy --- Informal sector --- International Financial Markets --- Macroeconomics --- Natural Disasters and Their Management --- Natural Resources --- Natural resources --- Non-renewable resources --- Nonrenewable Resources and Conservation: General --- Policy Coordination --- Policy Designs and Consistency --- Policy Objectives --- Public Enterprises --- Public sector --- Public-Private Enterprises --- Saving and Capital Investment --- Underground Econom --- Value of Firms --- Oman