This Week in Financial Regulation, January 23rd

This Week in Financial Regulation, January 23rd

Rent Check

Home values and young firm creation are strongly correlated, but when an increase in home values is driven by a bubble, the subsequent bust leads to a net loss for young firm creation, with negative effects on economic recovery overall.

 

News and Commentary

John Bogle, the inventor of the index fund, died last week.┬áIndex funds are low-fee investment vehicles that preclude investment managers from accruing the rents from “active management,” an investment strategy that goes against well-established economy theory.

 

New Research

Financial innovation and market structure. The study finds that issuers offer debt in “thin” markets, when investors have a higher price impact, and equity in “deeper” markets.

Corporate debt and firm size in emerging markets. “All else equal, large firms in emerging markets are more financially vulnerable [i.e. more highly leveraged] and also systemically important.”

A study of Spanish firms from 2003 to 2013 found that credit supply shocks have negative downstream effects on investment and economic output, especially during the 2008-09 financial crisis.

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By |2019-01-23T14:06:41-08:00January 23rd, 2019|Blog, Financial Regulation|