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.
SSRN
July 18, 2020
We measure popular sentiment toward finance using a computational linguistics approach applied to millions of books published in eight countries over hundreds of years. We document persistent differences in finance…
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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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Mercatus Center
July 20, 2020
The Dodd-Frank Wall Street Reform and Consumer Protection Act (commonly known as Dodd-Frank), which was intended to address perceived problems in the financial system and prevent future crises, is the…
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NBER
July 2020
We analyze the determinants and the long-run consequences of government interventions in the eurozone banking sector during the 2008/09 financial crisis. Using a novel and comprehensive dataset, we document that…
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NBER
July 2020
Bank holding companies (BHCs) can be complex organizations, conducting multiple lines of business through many distinct legal entities and across a range of geographies. While such complexity raises the costs…
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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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American Economic Review
2019
We study the market for ratings agencies in the commercial mortgage backed securities sector leading up to and including the financial crisis of 2007–2008. Using a structural model adapted from…
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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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SSRN
July 17, 2019
A series of statutory provisions codified at Title 12 of the U.S. Code empower special government officials known as supervisors to examine banks and tell bankers what to do, not…
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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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NBER
May 2019
Liquidity shocks transmitted through interbank connections contributed to bank distress during the Great Depression. New data on interbank connections reveal that banks were much more likely to close when their…
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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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This paper studies the country-level reaction of bank credit default swap (“CDS”) spreads and stock prices to bailout announcements in the US and five European countries in October 2008. Bailouts…
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Journal of Financial Stability
April 2019
We construct theory-based measures of systemic bank shocks. These measures complement banking crisis indicators employed in many empirical studies, which we show capture (lagged) policy responses to systemic bank shocks….
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Chicago Stigler Center
March 2018
In this paper, I employ anonymous New York City yellow taxi records to infer variation in interactions between insiders of the Federal Reserve Bank of New York (New York Fed)…
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NBER
July 2020
We show that the distribution of combined loan-to-value ratios (CLTVs) for purchase mortgages in the U.S. has been remarkably stable over the last 25 years. But there was a dramatic…
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Cato Institute
July 8, 2020
Between 1998 and 2006, house prices in the United States rose by about 90 percent but subsequently experienced a sharp decline by about a third until 2010. These house‐price developments…
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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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FEDS Notes
June 07, 2019
In this study, we provide a measure of the severity of the 2014-2018 US supervisory stress tests, and examine how that severity measure has evolved. Since the passage of the…
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NBER
June 2018
Bank failures are generally liquidity as well as solvency events. Whether it is households running on banks or banks running on banks, defunding episodes are full of drama. This theater…
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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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Management Science
January 19, 2018
This paper analyzes the relationship between bank lobbying and supervisory decisions of regulators and documents its moral hazard implications. Exploiting bank-level information on the universe of commercial and savings banks…
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Cato Institute
July 30, 2019
Since the 2008 financial crisis, banking regulators’ capital enhancement efforts have focused on permitting systemically important financial institutions to issue alternative forms of debt and quasi-debt instruments as a means…
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NBER
June 2018
Banks’ ratio of the market value to book value of their equity was close to 1 until the 1990s, then more than doubled during the 1996-2007 period, and fell again…
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Hoover Institution Economics Working Papers
June 17, 2019
The decentralized structure of the Federal Reserve System is evaluated as a mechanism for generating and processing new ideas on monetary and financial policy. The role of the Reserve Banks…
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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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Cato Institute
July 10, 2019
The Community Reinvestment Act (CRA) requires banks to lend to low- and moderate-income (LMI) households in the areas where they take deposits. But it has become obsolete. When the CRA…
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CEPR
June 2019
Financial crisis can trigger policy reversals, i.e. they can lead to a process of re- regulation of financial markets. Using a recent comprehensive dataset on financial liberalization across 94 countries…
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Journal of Financial Stability
August 2018
Multi-year forecasts of bank performance under stressful economic conditions determine large institution regulatory capital requirements and yet the accuracy of these forecasts is undocumented. I compare the accuracies of alternative…
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CEPR
July 2019
After the boom in US subprime lending came the bust – with a run on US shadow banks. The magnitude of boom and bust were, it seems, amplified by two…
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Bank of England
November 9, 2018
We quantify the size of a fire-sale externality in the derivatives market in the absence of a macroprudential buffer on top of microprudential initial margin requirements. We show how this…
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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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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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Journal of Economic Perspectives
January 2019
This article assesses the accomplishments, unfinished business, and outstanding issues in the post-crisis approach to prudential regulation. After briefly reviewing how the ongoing integration of capital markets and traditional lending…
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The International Aspects of Macroprudential Policy
August 2020
Countries are using macroprudential tools more actively with the goal of improving the resilience of their broader financial systems. A growing body of evidence suggests that these tools can accomplish…
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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
July 2019
The paper uses bank- and instrument-level data on asset holdings and liabilities to identify and estimate a general equilibrium model of trade in financial instruments. Bilateral ties are formed as…
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NBER
July 2019
Short-term debt that can serve as a medium of exchange is designed to be information insensitive. No one should be tempted to acquire private information to gain an informational advantage…
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Cato Journal
Fall 2018
Increasingly, our regulatory structure has been adopting processes that are inconsistent with adherence to the rule of law. These process concerns are rarely voiced by academics, but that is a…
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NBER
July 2019
Financial network structure is an important determinant of systemic risk. This paper examines how the U.S. interbank network evolved over a long and important period that included two key events:…
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NBER
March 2019
We create a newspaper-based Equity Market Volatility (EMV) tracker that moves with the VIX and with the realized volatility of returns on the S&P 500. Parsing the underlying text, we…
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CEPR
May 2019
Applying standard portfolio-sort techniques to bank asset returns for 15 countries from 2004 to 2018, we uncover a risk premium associated with implicit government guarantees. This risk premium is intimately…
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IMF
April 2019
This paper takes stock of the global economic recovery a decade after the 2008 financial crisis. Output losses after the crisis appear to be persistent, irrespective of whether a country…
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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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American Action Forum
February 2019
In the wake of the financial collapse of 2008, the federal government created new regulatory bodies to oversee aspects of the financial services industry; most notably the Federal Housing Finance…
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CEPR
July 2019
Financial crises often originate in debt markets, where collateral constraints and opacity of asset values generate intrinsic instability. In such ambiguous contexts endogenous beliefs formation plays a crucial role in…
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NBER
August 2019
This paper uses a structural model to show that foreclosures played a crucial role in exacerbating the recent housing bust and to analyze foreclosure mitigation policy. We consider a dynamic…
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NBER
August 2019
This paper finds that banks and non-banks respond differently to increased competition in consumer credit markets. Increased competition and the greater threat of failure induces banks to specialize more in…
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Economic Inquiry
July 16, 2019
This paper examines labor supply adjustment‐both at the intensive and extensive margins‐following financial market development. Specifically, we exploit the staggered passage of bank branching deregulation in the United State to…
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NBER
August 2019
We examine equity market integration for 17 countries from 1913-2018. We use network analysis to measure the evolution of global stock market integration as well as stock market integration between…
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NBER
September 2019
This paper proposes a theory of foreign reserves as macroprudential policy. We study an open economy model of financial crises, in which pecuniary externalities lead to overborrowing, and show that…
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AEA
March 2019
The National Banking Acts (NBAs) of 1863–1864 established rules governing the amounts and locations of interbank deposits, thereby reshaping the bank networks. Using unique data on bank balance sheets and…
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Journal of Accounting Research
October 2018
We investigate the frictions that impede individual investors’ use of accounting information and, in particular, their costs of monitoring and acquiring accounting disclosures. We do so using an archival setting…
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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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Journal of Financial Stability
December 2018
We examine the effect of economic policy uncertainty on the relation between investment and the cost of capital. Using the news-based index developed by Baker et al. (2016) for twenty-one…
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NBER
November 2019
By exploiting variation in state capital gains taxation as an instrument, we analyze the economic consequences of housing speculation during the U.S. housing boom in the 2000s. We find that…
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NBER
June 2020
The U.S. economy currently faces a truly extraordinary degree of uncertainty as a consequence of the COVID-19 pandemic. In these circumstances, the Federal Reserve could begin highlighting alternative scenarios to…
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CEPR
March 2018
We document large variation in the propensity and the intensity in which countries cooperate in the supervision of banks. We show that these variations can be linked to differences in…
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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 New York
September 2019
In this paper, we describe why the Credit Insecurity Index measures credit health more accurately, and how it is calculated from several Community Credit sub-components. We also introduce a typology…
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American Enterprise Institute
February 2019
This paper provides a comprehensive account of the evolution of default risk for newly originated home purchase loans since 1990. We bring together several data sources to produce this history,…
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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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NBER
December 2018
We employ a unique hand-collected dataset and a novel methodology to examine systemic risk before and after the largest U.S. banking crisis of the 20th century. Our systemic risk measure…
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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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Stanford University
November 15, 2018
We take issue with claims that the funding mix of banks, which makes them fragile and crisis-prone, is efficient because it reflects special liquidity benefits of bank debt. Even aside…
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NBER
May 2018
Narrative records in US newspapers reveal that about 70 percent of Federal Open Market Committee (FOMC) members who served during the last 55 years are perceived to have had persistent…
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Cato Journal
May 2020
Most discussions, and especially justifications, of central bank independence are expressed entirely in the language of economics. I wrote Unelected Power partly because I think that is not remotely sufficient…
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International Monetary Fund, Research Department
November 27. 2017
Financial crises are traditionally analyzed as purely economic phenomena. The political economy of financial booms and busts remains both under-emphasized and limited to isolated episodes. The policy discussions and economic…
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M-RCBG Associate Working
October 7,2019
We use hand-collected data from SEC’s litigation releases for insider trading violations to examine the effect of geographic distance on its enforcement activities and insider trading activities. First, we find…
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NBER
September 2019
This paper presents market-based evidence that President Trump influences expectations about monetary policy. The main estimates use tick-by-tick fed funds futures data and a large collection of Trump tweets criticizing…
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VoxEU
July 30, 2018
In the European Banking Authority’s EU-wide stress tests, banks project capital ratios under a hypothetical adverse scenario employing their own models, which are constrained by a common methodology set by…
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NBER
November 2019
We investigate the transmission of central bank liquidity to bank deposits and loan spreads in Europe over the period from January 2006 to June 2010. We find evidence consistent with…
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SSRN
October 23, 2019
Inconsistent or unpredictable swings in income and expenses make it difficult for families to plan spending, pay down debt, or determine how much to save. In this report, the JPMorgan…
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NBER
November 2019
We study default and endogenous leverage in the laboratory. To this purpose, we develop a general equilibrium model of collateralized borrowing amenable to laboratory implementation and gather experimental data. In…
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NBER
November 2019
This paper studies a model in which a low monetary policy rate lowers the cost of capital for entrepreneurs, potentially spurring productive investment. Low interest rates, however, also induce entrepreneurs…
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Journal of Financial Perspectives
March 21, 2013
Foundational financial legislation is typically adopted in the midst or aftermath of financial crises, when an informed understanding of the causes of the crisis is not yet available. Moreover, financial…
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NBER
November 2019
We provide novel systematic evidence on the extent and terms of direct lending by nonbank financial institutions, and explore whether banks are still special in lending to informationally opaque firms….
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The Journal of Alternative Investments
January 2020
This case study provides new information about alternative asset fees to many institutional investors by tapping a relatively unknown data source: state pension fund annual reports. Examining the few state…
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Niskanen Center
August 20, 2019
The more a government spends on social insurance, the less likely households are to fall into debt. Social insurance includes pensions, health care, family allowances and parental leave, job training,…
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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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SSRN
June 2, 2018
A newly emerged consensus holds that policy makers should use macroprudential regulation to prevent financial crises or soften their impact on the real economy. Despite their widespread use, little is…
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NBER
1994
Deposit insurance cannot be explained as an emergency measure conceived in haste to resolve an ongoing crisis. The legislation had been debated for years, the banking crisis of 1933 had…
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North Carolina Banking Institute
2013
Anat Admati argues that the banking system is too fragile and inefficient, and that reform efforts have been flawed. The fragility of the system causes booms and busts, and busts…
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Quarterly Review of Economics
2014
We find that regulators can implement identical rules inconsistently due to differences in their institutional design and incentives, and this behavior may adversely impact the effectiveness with which regulation is…
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NBER
January 1991
Empirical research has demonstrated the importance of such institutional structures as branch bank laws, bank cooperation arrangements, and formal clearing houses, for the probability of panic and for the resolution…
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Journal of Banking & Finance, vol. 19, pp. 483-489
June 1995
In taking up issues of bank capital requirements and the [Modigliani & Miller] M&M Propositions, I am actually returning to a subject treated in a paper on the regulation of…
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The Cato Institute
December 29, 1997
Two of the largest government-sponsored enterprises (GSEs), the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), receive government subsidies estimated to be worth…
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Stanford University Graduate School of Business
January 1999
We analyze a model of voluntary disclosure by firms in financial market and the desirability of disclosure regulation. In our model firms choose the precision of their disclosure. Disclosure is…
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The Cato Institute
November 13, 2003
Recent corporate scandals have ignited debate over appropriate rules for accounting and corporate governance. The debate has largely ignored an important preliminary question: who should set standards of corporate governance…
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Stanford University Graduate School of Business
July 2007
We examine whether a large shareholder can alleviate conflicts of interest between managers and shareholders through the credible threat of exit on the basis of private information. In our model…
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House Committee on Oversight and Government Reform
March 19, 2008
To augment its voice in the GSE-reform debate, Countrywide dispensed favors to VIPs who it believed might be worthwhile to the company. This group of borrowers included legislators, congressional staffers,…
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American Economic Review
November 2008
We examine the determinants of congressional voting behavior on two of the most significant pieces of federal legislation in U.S. economic history: the American Housing Rescue and Foreclosure Prevention Act…
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The Cato Institute
November 18, 2008
The expansion in risky mortgages to underqualified borrowers was encouraged by the federal government. The growth of “creative” nonprime lending followed Congress’s strengthening of the Community Reinvestment Act, the Federal…
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The Cato Institute
March 23, 2009
This Policy Analysis explains the antecedents of the current global financial crisis and critically examines the reasoning behind the U.S. Treasury and Federal Reserve’s actions to prop up the financial…
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The Cato Institute
April 20, 2009
Financial-institution bailout policy in the United States is implemented through three agencies: the Federal Deposit Insurance Corporation, the Federal Reserve, and the Treasury Department. The need for orderly financial dealings,…
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Bank of International Settlements Working Paper no. 599
September 25, 2009
The costs of this intervention are already being felt. As in the Middle Ages, perceived risks from lending to the state are larger than to some corporations. The price of…
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The Cato Institute
October 8, 2009
Many commentators have argued that if the Federal Reserve had followed a stricter monetary policy earlier this decade when the housing bubble was forming, and if Congress had not deregulated…
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