The Optimal Finance Structure
Banking developed rather differently in Anglo-Saxon countries than on the European Continent and in Japan. In Anglo-Saxon countries, notably the UK...
Industry Window Dressing
We explore a new mechanism through which investors take correlated shortcuts. Specifically, we exploit a regulatory provision governing firm...
Investors’ Horizons and the Amplification of Market Shocks
This paper shows that during episodes of market turmoil 13F institutional investors with short trading horizons sell their stockholdings to a larger...
Cross-Market Timing in Security Issuance
The conventional view of market timing suggests an unambiguous, negative relation between equity misvaluation and the equity share in new issues—that...
The Potential Instruments of Monetary Policy
In most standard (Dynamic Stochastic General Equilibrium, DSGE) macro-models, there is a single riskless rate, set by the Central Bank in accord with...
“Theory anchors” explain the 1920s NYSE Bubble
The NYSE boom of the 1920s ended with the infamous crash of October 1929 and subsequent collapse in common stock prices from 1929-1932. Most...
Foresight: The Future of Computer Trading in Financial Markets
SRC researchers were involved in a study that explores how computer generated trading in financial markets will evolve over the next 10 years. The...
From Female Labor Force Participation to Boardroom Gender Diversity
The list of barriers to female representation in management is analogous to the list of barriers to female labor force participation. Accordingly, we...
International Correlation Risk
We provide novel evidence of priced correlation risk in the foreign exchange market. Currencies that perform badly (well) during periods of high...
What should we do about (Macro) Pru? Macro Prudential Policy and Credit
Credit growth is widely used as an indicator of potential financial stress, and it plays a role in the new Basel III framework. However, it is not...
Taming the finance monster
The best way to resolve global financial instability is for the owners of capital to assert themselves, with sovereign funds well positioned to take...
Maintaining Confidence - Understanding and preventing a major financial institution failure mode
This paper proposes the solvency/liquidity spiral as an failure mode affecting large financial institutions in the recent crisis. The essential...
Bank Capital Standards: A critical review
The aim of this paper is to review the significant flaws in the Basel Accords, which undermine their contribution to stability in banking and...
A Coasean Approach to Bank Resolution Policy in the Eurozone
The Eurozone needs a bank resolution regime that can work across seventeen independent nations of diverse sizes with varying levels of financial...
A flow-based explanation for return predictability
Review of Financial Studies, 25 (12). pp. 3457-3489.
Shareholder Empowerment and Bank Bailouts
We investigate the hypothesis that shareholder empowerment may have led to more bank bailouts during the recent financial crisis. To test this...
