Fire Sales in Finance and Macroeconomics

摘要

Analysts of the recent financial crisis often refer to the role of asset "fire sales" in depleting the balance sheets of financial institutions and aggravating the fragility of the financial system. For example, a report from the U.S. Treasury (2009) held: "An initial fundamental shock associated with the bursting of the housing bubble and deteriorating economic conditions generated losses for leveraged investors including banks... . The resulting need to reduce risk triggered a wide-scale deleveraging in these markets and led to fire sales." Similarly, a discussion of the crisis by leading American financial economists (French et al., 2010, p. 67) argued: "A bank that simply suffers large losses may be forced to reduce its risk by selling assets at distressed or fire-sale prices. If other banks must revalue their assets at these temporarily low market values, the first sale can set off a cascade of fire sales that inflicts losses on many institutions. Thus, whether through defaults or fire sales, one troubled bank can damage many others, reducing the financial system's capacity to bear risk and make loans."