Getting Rich on Government-Backed Mortgages
A branch manager gets home loans for borrowers with weak credit or low incomes—and taxpayers back him up. Prashant Gopal Bloomberg Businessweek May 24, 2018 External Link
Why Do Individual Investors Disregard Accounting Information? The Roles of Information Awareness and Acquisition Costs
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 [...]
Policy uncertainty, investment, and the cost of capital
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 [...]
The Spread of Deposit Insurance and the Global Rise in Bank Asset Risk since the 1970s
We construct a new measure of the changing generosity of deposit insurance for many countries, empirically model the international influences on the adoption and generosity of deposit insurance, and show [...]
Regulatory Capital Rules: Treatment of Land Development Loans for the Definition of High Volatility Commercial Real Estate Exposure
The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (collectively, the agencies) are issuing a notice [...]
Mortgage Risk Since 1990
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, [...]
The dark side of stress tests: Negative effects of information disclosure
This paper studies the effect of information disclosure on banks’ portfolio risk. We cast a simple banking system into a general equilibrium model with trading frictions. We find that the [...]
JPMorgan Chase London Whale G: Hedging versus Proprietary Trading
In December 2013, the primary United States financial regulatory agencies jointly adopted final rules to implement Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which is [...]
Comprehensive Capital Analysis and Review 2018: Assessment Framework and Results
In the supervisory post-stress capital assessment, the Federal Reserve estimates that the aggregate common equity tier 1 ratio for the firms participating in CCAR 2018 would decline in the severely [...]
Bank Leverage, Welfare, and Regulation
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 [...]