This website features a collection of links to outside resources, many of which were cited in The Captured Economy, for readers interested in learning more about regressive regulation.
To filter the reference library by topic, please use the links on a topic page or open this page on a full-size screen and use the provided menu.
NBER
May 2021
Corporate bond markets proved remarkably resilient against a sharp contraction caused by the 2020 Covid-19 pandemic. We document three important findings: (1) bond issuance increased immediately when the contraction hit,…
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Ohio State University, Fisher College of Business Research Paper Series
June 19, 2020
We study the long-run outcomes associated with hedge funds’ compensation structure. Over a 22-year period, the aggregate effective incentive fee rate is 2.5 times the average contractual rate (i.e., around…
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NBER
July 2020
We investigate the impact on firms of joining the S&P 500 index from 1997 to 2017. We find that the positive announcement effect on the stock price of index inclusion…
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NBER
May 2020
We quantify the impact of bank market power on monetary policy transmission through banks to borrowers. We estimate a dynamic banking model in which monetary policy affects imperfectly competitive banks’…
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Journal of Financial Stability
October 2019
This study examines the effect of policy uncertainty on corporate debt maturity structure. We find that elevated levels of policy uncertainty lead firms to shorten debt maturity, indicating that firms…
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Journal of Banking and Finance
February 2019
We examine the cleansing effect of financial crises via their contribution to the exit of inefficient US commercial banks from 1984 to 2013. We find a larger increase in the…
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NBER
September 2019
Recent evidence suggests an increasing risk of natural disasters of the magnitude of hurricane Katrina and Sandy. Concurrently, the number and volume of flood insurance policies has been declining since…
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Levy Economics Institute
July 2019
The 2008 crisis created a need to rethink many aspects of economic theory, including the role of public intervention in the economy. On this issue, we explore the Barro-Ricardo equivalence,…
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NBER
August 2019
Brokers continue to play a critical role in intermediating institutional stock market transactions. More than half of all institutional investor order flow is still executed by high-touch (non-electronic) brokers. Despite…
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American Economic Review
May 2019
We investigate the effect of house prices on household borrowing using administrative mortgage data from the United Kingdom and a new empirical approach. The data contain household-level information on house…
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American Economic Review
May 2019
This paper shows that a macro model with segmented financial markets can generate sizable movements in housing prices in response to changes in credit conditions. We establish theoretically that reductions…
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NBER
May 2019
We investigate how communication within banks affects small business lending. Using travel time between a bank’s headquarters and its branches to proxy for the costs of communicating soft information, we…
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Joint Center for Housing Studies of Harvard University
May 15, 2019
This paper seeks to refine our understanding of how refinancing a mortgage affects household outcomes. This issue has attracted particular attention in the wake of the Great Recession, however, there…
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The Federal Reserve
May 2019
This report presents the Federal Reserve Board’s current assessment of the resilience of the U.S. financial system. By publishing this report, the Board intends to promote public under- standing and…
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Basel Committee on Banking Supervision
March 20, 2019
“This report presents the results of the Basel Committee’s latest Basel III monitoring exercise, based on data as of 30 June 2018. Through a rigorous reporting process, the Committee regularly…
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University of Maryland
January 3, 2017
Economic recoveries can be slow, fast, or involve double dips. This paper provides an explanation based on the dynamic interactions between bank lending standards and firm entry selection. In the…
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Board of Governors of the Federal Reserve System
October 12, 2018
With the national unemployment rate running below 4 percent, the possibility that an overheated economy could lead to financial imbalances, which in turn could generate or amplify economic distress, has…
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Board of Governors of the Federal Reserve System
October 12, 2018
An overheated economy has the potential to lead to financial imbalances, which in turn could generate or amplify economic distress. In two complementary FEDS notes, we study the link between…
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NBER
September 2018
We examine the negative relationship between the rate of growth in credit and the rate of growth in output per worker. Using a panel of 20 countries over 25 years,…
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United States Government Accountabilty Office
January 2019
Banking regulators such as the Office of the Comptroller of the Currency (OCC) can implement policies to address the risk of regulatory capture. The objectives of these policies include reducing…
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NBER
June 2018
The economic link between globalization and income distribution has been rigorously studied from the perspectives of the international-trade paradigm. However, the international-trade viewpoint does not address the impact of globalization…
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Journal of Financial Stability
October 2018
This study reports estimates of the marginal benefits and costs of increasing the regulatory minimum bank equity-to-asset “leverage ratio” from 4 to 15 percent. Benefits arise from reducing the probability…
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Journal of Financial Stability
February 2019
According to “Schwartz’s conventional wisdom” and what has been called “divine coincidence”, price stability should imply macroeconomic and financial stability. However, in light of the global financial crisis, with monetary…
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Bank for International Settlements
November 15, 2018
This paper empirically investigates the link between financial structure and income inequality. Using data for a panel of 97 economies over the period 1989-2012, we find that the relationship is…
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Financial Stability Board
June 7, 2019
With the main elements of the G20 reforms agreed and implementation underway, an analysis of the effects of these reforms is becoming possible. To that end, the FSB developed a…
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The Great Democracy Initiative
June 2018
Among the perks of being a bank is the privilege of holding an account with the central bank. Unavailable to individuals and nonbank businesses, central bank accounts pay higher interest…
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Cato Institute
September 2019
As a consequence of the large-scale asset purchases by the Federal Reserve during its quantitative easing operations that began during the Great Recession in 2008, the Fed’s interest income increased…
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NBER
April 2019
Nominal stock prices are arbitrary. Therefore, when evaluating how a piece of news should affect the price of a stock, rational investors should think in percentage rather than dollar terms….
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Swedish House of Finance Working Paper
June 4, 2018
Financial sector wages increased extraordinarily over the last decades. An explanation for this trend is that skill demand rose more in finance than other sectors. We use Swedish administrative data,…
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Cato Institute
September 2019
Reliance on macroprudential tools is problematic in several ways. First, in spite of reforms to the regulation of bank capital, high leverage, regulatory complexity, and public-sector guarantees continue to be…
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Bank for International Settlements
September 2011
At moderate levels, debt improves welfare and enhances growth. But high levels can be damaging. When does debt go from good to bad? We address this question using a new…
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Center for Retirement Research
January 2019
Does the use of assumed investment returns to value liabilities and calculate required contributions lead public pension plans to invest more in risky assets? The analysis finds that, even after…
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NBER
September 2018
We provide direct evidence of leverage-induced fire sales contributing to a market crash using account-level trading data for brokerage- and shadow-financed margin accounts during the Chinese stock market crash of…
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AEI
April 2, 2019
Since the 2009 Supervisory Capital Assessment Program (SCAP), US regulators have employed a representative bank model as the benchmark of comparison in mandatory stress test exercises. For risk management functions,…
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Journal of Financial Stability
January 2011
This paper examines the interaction between monetary policy and financial stability and provides an assessment of the implications of banks’ risk management practices for monetary policy. By considering the desire…
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Kelley School of Business
May 16, 2018
A common view of retail finance is that conflicts of interest contribute to the high cost of advice. Within a large sample of Canadian financial advisors and their clients, however,…
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BIS
June 24, 2019
In 2010, the Basel Committee on Banking Supervision published an assessment of the long-term economic impact (LEI) of stronger capital and liquidity requirements (BCBS (2010)). This paper considers this assessment…
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NBER
February 2021
Using a survey of AFA members, we analyze how demographics, time allocation, production mechanisms, and institutional factors affect research production during the pandemic. Consistent with the literature, research productivity falls…
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NBER
October 2020
Liquidity provision is a bet against private information: if private information turns out to be higher than expected, liquidity providers lose. Since information generates volatility, and volatility co-moves across assets,…
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Social Transmission Bias and Cultural Evolution in Financial Markets
August 2020
The thoughts and behaviors of financial market participants depend upon adopted cultural traits, including information signals, beliefs, strategies, and folk economic models. Financial traits compete to survive in the human…
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Levy Economics Institute
March 2021
It is widely agreed that the Nasdaq during the dot-com era 20 years ago was a full-fledged stock market bubble. Recently, the US stock market according to many metrics has…
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NBER
October 2020
We review an empirical literature that studies the role of social interactions in driving economic and financial decision making. We first summarize recent work that documents an important role of…
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NBER
September 2020
The effect of financial crises on innovation is an unsettled and important question for economic growth, but one difficult to answer with modern data. Using a differences-in-differences design surrounding the…
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NBER
April 2021
We show that the role of unsecured, short-term wholesale funding for global banks has changed significantly in the post-financial-crisis regulatory environment. Global banks mainly use such funding to finance liquid,…
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NBER
October 2020
The firms listed on the stock market in aggregate as well as the top market capitalization firm contribute less to total non-farm employment and GDP now than in the 1970s….
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The Journal of Finance
October 2010
The aggregate portfolio of U.S. equity mutual funds is close to the market portfolio, but the high costs of active management show up intact as lower returns to investors. Bootstrap…
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Bank for International Settlements
March 2019
This special feature is structured as follows. First, we present the main features of a public repository of studies on the effects of bank regulations, called FRAME (Financial Regulation Assessment:…
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VoxEU
March 2019
In the past 30 years, defaults on corporate bonds in the US have been substantially above the historical average. Using firm-level data, this column shows that the increase in credit…
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VoxEU
March 27, 2019
Various factors have been advanced as possible causes of the build-up of risks leading to the Global Crisis, and multiple policies have been put forward to address them. This column…
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NBER
March 2019
The risk premium puzzle is worse than you think. Using a new database for the U.S. and 15 other advanced economies from 1870 to the present that includes housing as…
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NBER
March 2019
Aggregate housing demand shocks are an important source of house price fluctuations in the standard macroeconomic models, and through the collateral channel, they drive macroeconomic fluctuations. These reduced-form shocks, however,…
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NBER
April 2019
We provide novel evidence on the driving forces behind the sharp increase in equity values over the post-war era. From the beginning of 1989 to the end of 2017, 23…
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NBER
January 2019
Modern financial crises are difficult to explain because they do not always involve bank runs, or the bank runs occur late. For this reason, the first year of the Great…
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NBER
January 2019
The Great Recession and its aftermath saw the worst relative performance of young firms in at least 35 years. More broadly, as we show, young-firm activity shares move strongly with…
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NBER
August 2019
This paper shows that banks raising deposits in more concentrated markets have more funding stability, which enhances banks’ ability to extend longer-maturity loans. We show that banks raising deposits in…
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NBER
January 2019
We propose a model where both security design and market structure are endogenously determined to explain why standardized securities are frequently traded in decentralized markets. We find that issuers offer…
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CEPR
April 2019
We describe how the structure and governance of international trade finance – the oldest domain of international finance- evolved from the Middle Ages until today. Trade finance products initially consisted…
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NBER
July 2019
Hedge fund managers contribute substantial personal capital, or “skin in the game,” into their funds. While these allocations may better align incentives, managers may also strategically allocate their private capital…
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Cambridge University Press
August 5, 2019
After the global financial crisis of 2007–9, policymakers hailed macroprudential policy as the solution to financial markets’ boom-bust patterns. Financial regulations would have to operate countercyclically, increasing in stringency during…
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Federal Reserve Bank of Kansas City
August 10, 2018
We find that (1) an intensification of competition increases the efficiency and fragility of banks; (2) economies can avoid the fragility costs of competition by enhancing bank governance and tightening…
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Bank for International Settlements
October 5, 2018
This paper studies the effects of prudential regulation, financial development, and financial openness on economic growth. Using both existing models and a new OLG framework with banking and prudential regulation…
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Journal of Economic Literature
June 1997
A growing body of empirical analyses, including firm-level studies, industry-level studies, individual country-studies, and broad cross country comparisons, demonstrate a strong positive link between the functioning of the financial system…
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International Monetary Fund
January 11, 2019
We analyze how bank profitability impacts financial stability from both theoretical and empirical perspectives. We first develop a theoretical model of the relationship between bank profitability and financial stability by…
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Center for Retirement Research
August 2018
In recent years, public plans have increasingly scrutinized the fees they pay to external asset managers to gauge whether the fees are justified. To isolate the impact of fees on…
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NBER
June 2018
This paper studies the synchronization of financial cycles across 17 advanced economies over the past 150 years. The comovement in credit, house prices, and equity prices has reached historical highs…
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Voxeu
February 2019
Heavily depressed housing prices and high contemporaneous rates of foreclosure have been observed in many low-income and minority neighbourhoods in US cities, suggesting foreclosures may have spillover effects within neighbourhoods….
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European Central Bank
January 2019
We provide evidence that a weak banking sector has contributed to low productivity growth following the European sovereign debt crisis. An unexpected increase in capital requirements for a subset of…
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Liberty Street Economics, Federal Reserve Bank of New York
June 25, 2018
The adoption of new technologies is transforming the mortgage industry. For instance, borrowers can now obtain a mortgage entirely online, and lenders use increasingly sophisticated methods to verify borrower income…
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Vox EU
October 2019
There are still remarkable gaps in the data available on the overall structure of the financial systems of major economies. This column presents rough estimates for the UK and the…
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Journal of Finance
September 13, 2015
A sharp increase in the popularity of commodity investing in the past decade has triggered an unprecedented inflow of institutional funds into commodity futures markets, referred to as the financialization…
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Federal Reserve Bank of Chicago
January 2019
At their peak in 2005, roughly 60 percent of all purchase mortgage loans originated in the United States contained at least one non-traditional feature. These features, which allowed borrowers easier…
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NBER
November 2019
Research finds strong links between credit booms and macroeconomic outcomes like financial crises and output growth. Are impacts also seen in financial asset prices? We document this robust and significant…
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NBER
April 2019
Are financial crises a negative shock to demand or a negative shock to supply? This is a fundamental question for both macroeconomics researchers and those involved in real-time policymaking, and…
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Joint Center for Housing Studies
March 4, 2019
This study provides new evidence on the effectiveness of the Community Reinvestment Act (CRA) on small business lending by focusing on a sample of neighborhoods with changed CRA eligibility status…
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Bank for International Settlements
April 2016
One aim of post-crisis monetary policy has been to ease credit conditions for borrowers by unlocking bank lending. We find that bank equity is an important determinant of both the…
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NBER
April 2019
The Critical Finance Review commissioned Li, Novy-Marx, and Velikov (2017) and Pontiff and Singla (2019) to replicate the results in Pástor and Stambaugh (2003). Both studies successfully replicate our market-wide…
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NBER
June 2018
We develop a theory of trust in lending, distinguishing between trust and reputation, and use it to analyze the competitive interactions between banks and non-bank lenders (fintech firms). Trust enables…
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NBER
April 2018
There are concerns that the Dodd-Frank Act (DFA) has impeded small business lending. By increasing the fixed regulatory compliance requirements needed to make business loans and operate a bank, the…
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FRB of Philadelphia Research Department
April 2018
The studies I have reviewed suggest that for every 1 percent increase in capital minimums, lending rates will rise by 5 to 15 basis points and economic output will fall…
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FRB St. Louis
June 2019
What are the quantitative effects of countercyclical capital buffers (CCyB)? I study this question in the context of a nonlinear DSGE model with a financial sector that is subject to…
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Northwestern Journal of International Law & Business
October 2016
The regulatory changes and technological developments following the 2008 Global Financial Crisis are fundamentally changing the nature of financial markets, services and institutions. At the juncture of these two phenomena…
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Bank of England Working Paper
September 2014
We estimate the effect of changes in microprudential regulatory capital requirements on bank capital ratios and bank lending. We do so by running panel regressions using a rich new data…
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Journal of Business
1997
In this article we examine theoretically the use of benchmark portfolios in the compensation of privately informed portfolio managers. We find that the use of benchmarks often observed in practice,…
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NBER
1998
In this paper, I examine how insurance spread from one group of institutions to the next and how the level of insurance was gradually raised. Although deposit insurance has often…
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World Bank Economic Review
2013
This paper examines the evolving importance of banks and securities markets during the process of economic development. We find that as countries develop economically, (1) the size of both banks…
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Journal of Financial Economics
2014
During the past decade, non-bank institutional investors are increasingly taking larger roles in the corporate lending than they historically have played. These non-bank institutional lenders typically have higher required rates…
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The Quarterly Journal of Economics
2015
We analyze the effectiveness of consumer financial regulation by considering the 2009 Credit Card Accountability Responsibility and Disclosure (CARD) Act in the United States. Using a difference-in- differences research design…
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Federal Reserve Bank of St. Louis
April 9, 1992
I document the erosion of the historic restriction, at least since the 1930s, of Federal Reserve discount window assistance to liquidity-strained banks on the security of sound assets. Section 1…
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Quarterly Journal of Economics
February 1994
In the context of an overlapping-generations model, we show that liquidity constraints on households (i) raise the saving rate, (ii) strengthen the effect of growth on saving, (iii) increase the…
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NBER
December 1999
Both investors and borrowers are concerned about liquidity. Investors desire liquidity because they are uncertain about when they will want to eliminate their holding of a financial asset. Borrowers are…
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Annual World Bank Conference on Development Economics
January 2000
This paper attempts to set forth a framework for thinking about growth volatility which is general enough to incorporate the important structural, institutional, and policy variations among countries which might…
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The Cato Institute
June 21, 2000
The 1934 Securities and Exchange Act and subsequent amendments required securities exchanges to operate as self-regulatory organizations (SROs) that police themselves under the supervision of the Securities and Exchange Commission….
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Journal of Financial Intermediation
January 2002
This paper presents a model of competition in the banking industry based upon the interplay of two factors: the level of capitalization of banks and their ability to monitor different…
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Bank of International Settlements
April 2002
The on-going reform of the Basel Accord relies on three “pillars”: capital adequacy requirements, centralized supervision and market discipline. This article develops a simple continuous-time model of commercial banks’ behavior…
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University of Florida
September 2002
We document the build-up of regulatory and market equity capital in large U.S. bank holding companies between 1986 and 2000. During this time, large banking firms raised their capital ratios…
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Tinbergen Institute
June 22, 2006
We assess the influence of competition and capital regulation on the stability of the banking system. We particularly ask two questions: i) how does capital regulation affect (endogenous) entry; and…
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Journal of Banking and Finance
August 2006
This paper develops a banking-sector framework with heterogeneous loan monitoring costs. Banks are exposed to the moral hazard behavior of borrowers and endogenously choose whether to monitor their loans to…
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B.E. Journal of Macroeconomics
July 2008
While the theoretical and empirical finance literature has focused almost exclusively on enterprise credit, about half of credit extended by banks to the private sector in a sample of 45…
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NBER
July 2008
A fall in house prices due to a change in fundamental value redistributes wealth from those long housing (for whom the fundamental value of the house they own exceeds the…
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NBER
October 2008
We model the panic of 2008 as part of the wealth and substitution effects deriving from a housing price crash that began in 2006. The dissipation of the wealth effect…
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