The Indirect Costs of Lehman’s Bankruptcy

Erin Denison, Michael Fleming and Asani Sarkar

No 20190117, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: In our previous post, we assessed losses to customers and clients from foregone opportunities after Lehman Brothers filed for bankruptcy in September 2008. In this post, we examine losses to Lehman and its investors in anticipation of bankruptcy. For example, if bankruptcy is expected, Lehman’s earnings may decline as customers close their accounts or certain securities (such as derivatives) to which Lehman is a counterparty may lose value. We estimate these losses by analyzing Lehman’s earnings and stock, bond, and credit default swap (CDS) prices.

Keywords: costs; stock; earnings; bond; CDS prices; Lehman bankruptcy (search for similar items in EconPapers)
JEL-codes: G33 (search for similar items in EconPapers)
Date: 2019-01-17
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