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 [...]
Impact of financial regulations: insights from an online repository of studies
This special feature is structured as follows. First, we present the main features of a public repository of studies on the effects of bank regulations, called FRAME (Financial Regulation Assessment: [...]
Disruption and credit markets
In the past 30 years, defaults on corporate bonds in the US have been substantially above the historical average. Using firm-level data, this column shows that the increase in credit [...]
The Founding of the Federal Reserve, the Great Depression and the Evolution of the U.S. Interbank Network
Financial network structure is an important determinant of systemic risk. This paper examines how the U.S. interbank network evolved over a long and important period that included two key events: [...]
Policy News and Stock Market Volatility
We create a newspaper-based Equity Market Volatility (EMV) tracker that moves with the VIX and with the realized volatility of returns on the S&P 500. Parsing the underlying text, we [...]
Prone to Fail: The Pre-Crisis Financial System
In this essay, I will review the key sources of fragility in the core financial system. The first section focuses on the weakly supervised balance sheets of the largest banks [...]
Risky Bank Guarantees
Applying standard portfolio-sort techniques to bank asset returns for 15 countries from 2004 to 2018, we uncover a risk premium associated with implicit government guarantees. This risk premium is intimately [...]
A Shortage of Short Sales: Explaining the Underutilization of a Foreclosure Alternative
The Great Recession led to widespread mortgage defaults, with borrowers resorting to both foreclosures and short sales to resolve their defaults. I first quantify the economic impact of foreclosures relative [...]
Monetary policy, macroprudential policy, and financial stability
Various factors have been advanced as possible causes of the build-up of risks leading to the Global Crisis, and multiple policies have been put forward to address them. This column [...]
The Total Risk Premium Puzzle
The risk premium puzzle is worse than you think. Using a new database for the U.S. and 15 other advanced economies from 1870 to the present that includes housing as [...]