Firing the wrong workers: Financing constraints and labor misallocation
Journal of Financial Economics, 133 (3), 589-607
The dissonance of the short and long term
The type of risk we most care about is long-term, what happens over years or decades, but we tend to manage that risk over short periods. This column...
Central banks and reputation risk
As central banks accumulate ever more job functions, their reputation risk increases. This column offers a cautionary tale from Iceland where, after...
Information Acquisition with Heterogeneous Valuations
We study the market for a risky asset with heterogeneous valuations. Agents seek to learn about their own valuation by acquiring private information...
Artificial Intelligence and Systemic Risk
Artificial intelligence (AI) is rapidly changing how the financial system is operated, taking over core functions because of cost savings and...
Financial crises and liberalization: Progress or reversals?
Financial crisis can trigger policy reversals, i.e. they can lead to a process of reregulation of financial markets. Using a recent comprehensive...
Clients’ Connections
We propose a new measure of private information in decentralised markets – connections – defined as the number of dealers with whom a client trades in...
Financial crises and the dynamics of financial de-liberalisation
Financial crises play a key role in changing existing policies concerning financial markets and institutions. This column provides new evidence for...
The Efficient IPO Market Hypothesis: Theory and Evidence
We derive the optimal underwriting method and the quantitative IPO pricing rule that this method implies in a market with informational frictions...
The wealth effect: The middle class and the changing politics of banking crises
The accumulation of mass financialised wealth has transformed the politics of banking crises. This column shows that the rising wealth of the middle...
Bank Resolution and the Structure of Global Banks
The Review of Financial Studies, 32(6), 2384–2421.
Lending cycles and real outcomes: Costs of political misalignment
Government ownership of banks can help solve credit market failures and stabilise the supply of credit over the business cycle. However, it can also...
Sentiment and speculation in a market with heterogeneous beliefs
We present a dynamic model featuring risk-averse investors with heterogeneous beliefs. Individual investors have stable beliefs and risk aversion, but...
Reconstructing and Stress Testing Credit Networks
Financial networks are an important source of systemic risk, but often only partial network information is available. In this paper, we use data on...
