Externalities and Financial Crisis – Enough to Cause Collapse?
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 [...]
Macroprudential margins: a new countercyclical tool?
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 [...]
What Explains Differences in Finance Research Productivity During the Pandemic?
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 [...]
Social Transmission Bias and Cultural Evolution in Financial Markets
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 [...]
Financial Regulation: Still Unsettled a Decade After the Crisis
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 [...]
The International Aspects of Macroprudential Policy
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 [...]
Arbitrage Capital of Global Banks
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, [...]
The Transmission of Shocks in Endogenous Financial Networks: A Structural Approach
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 [...]
The Information View of Financial Crises
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 [...]
Restoring the Rule of Law in Financial Regulation
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 [...]