The Repeal of the Glass-Steagall Act: Myth and Reality
When the United States suffered a severe financial crisis less than a decade later, some leapt to the conclusion that this repeal was at least partly to blame. Indeed, both [...]
Did the founding of the Federal Reserve affect the vulnerability of the interbank system to contagion risk?
As a result of legal restrictions on branch banking, an extensive interbank system developed in the United States during the 19th century to facilitate interregional payments and flows of liquidity [...]
Journal of Financial Stability
We study the effects of a phase-in of the liquidity coverage ratios (LCR). We find surprisingly that LCR, while reducing systemic risk in the initial phase, might produce an increase [...]
Benchmarking macroprudential policies: An initial assessment
In recognition of the severe consequences of the recent international financial crisis, the topic of macroprudential policy has elicited considerable research effort. The present study constructs, for 46 economies around [...]
Benchmarking macroprudential policies: An initial assessment
In recognition of the severe consequences of the recent international financial crisis, the topic of macroprudential policy has elicited considerable research effort. The present study constructs, for 46 economies around [...]
Taming the Basel leverage cycle
We investigate a simple dynamical model for the systemic risk caused by the use of Value-at-Risk, as mandated by Basel II. The model consists of a bank with a leverage [...]
How do Quasi-Random Option Grants Affect CEO Risk-Taking?
We examine how an increase in stock option grants affects CEO risk-taking. The overall net effect of option grants is theoretically ambiguous for risk-averse CEOs. To overcome the endogeneity of [...]
Competition, Reach for Yield, and Money Market Funds
Do asset managers reach for yield because of competitive pressures in a low interest rate environment? I propose a tournament model of money market funds (MMFs) to study this issue. [...]
Political institutions and bank risk-taking behavior
This paper examines the impact of political institutions on bank risk-taking behavior. Using an international sample of banks from 98 countries over the period 1998–2007, I document that sound political [...]
Peer bank behavior, economic policy uncertainty, and leverage decision of financial institutions
This paper explores the determinants for the leverage decision of financial institutions via the channels of bank-specific characteristics, peer bank behavior, and economic policy uncertainties, which are critical to appropriately [...]