Crisis Innovation
The effect of financial crises on innovation is an unsettled and important question for economic growth, but one difficult to answer with modern data. Using a differences-in-differences design surrounding the [...]
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, [...]
Has the Stock Market Become Less Representative of the Economy?
The firms listed on the stock market in aggregate as well as the top market capitalization firm contribute less to total non-farm employment and GDP now than in the 1970s. [...]
How Do Mortgage Refinances Affect Debt, Default, and Spending? Evidence from HARP
We use quasi-random access to the Home Affordable Refinance Program (HARP) to identify the causal effect of refinancing into a lower-rate mortgage on borrower balance sheet outcomes. Refinancing substantially reduces [...]
Luck Versus Skill in the Cross Section of Mutual Fund Returns
The aggregate portfolio of U.S. equity mutual funds is close to the market portfolio, but the high costs of active management show up intact as lower returns to investors. Bootstrap [...]
Moral Hazard During the Housing Boom: Evidence from Private Mortgage Insurance
Was the mortgage boom fueled by optimism around house prices, or did misaligned incentives in the mortgage industry also play a role? In this paper, we provide novel evidence of [...]
Do financial crises cleanse the banking industry? Evidence from US commercial bank exits
We examine the cleansing effect of financial crises via their contribution to the exit of inefficient US commercial banks from 1984 to 2013. We find a larger increase in the [...]
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 [...]
Buffer Capital, Loan Portfolio Quality and the Performance of Microfinance Institutions: A Global Analysis
Using a sample of 625 microfinance institutions (MFI) across 40 countries from 2010-2015, we empirically examine the effect of buffer capital on the performance of MFIs and how this effect [...]