Signalling in Tender Offer Games
We examine whether a bidder can use tender o§er terms to signal post-takeover security benefits. Neither restricted bids nor cash-equity offers allow...
Limits of Arbitrage: The State of the Theory
We survey theoretical developments in the literature on the limits of arbitrage. This literature investigates how costs faced by arbitrageurs can...
Credit Rating and Competition
In principle, credit rating agencies are supposed to be impartial observers that bridge the gap between private information of issuers and the...
The Price Impact of Institutional Herding
In this paper we develop a simple theoretical model to analyze the impact of institutional herding on asset prices. A growing empirical literature has...
Rent Capture Through Financial Innovation
How does economic theory need to adjust in light of the global financial crisis? This column presents a new insight on how innovation leads to rent...
British monetary targets 1976 to 1987: a view from the fourth floor of the Bank of England
Broad money and its credit counterparts played a key role in the conduct of British monetary policy in the period 1976 to 1987. This paper examines...
Crash 08 a regulatory debacle to be mended
The major financial crises of the last 30 years are analyzed and some common features brought to light: lax supervision, easy money, risk appetite...
Connected Stocks
By connecting stocks through common active mutual fund ownership, we forecast cross-sectional variation in return covariance, controlling for...
Central bank co-operation and International liquidity in the financial crisis of 2008-09
The advent of the financial crisis in August 2007, and its subsequent intensification, has largely eroded the hitherto apparently sharp distinction...
Modelling a Housing and Mortgage Crisis
The purpose of this paper is to explore financial instability in this case due to a housing crisis and defaults on mortgages. The model incorporates...
Risk Appetite and Endogenous Risk
Risk is endogenous. Equilibrium risk is the fixed point of the mapping that takes perceived risk to actual risk. When risk-neutral traders operate...
On Dividend Restrictions and the Collapse of the Interbank Market
Until recently, financial services regulation remained largely segmented along national lines. The integration of financial markets, however, calls...
Stronger Risk Controls Lower Risk Evidence from US Bank Holding Companies
In this paper, we investigate whether U.S. bank holding companies (BHCs) with strong and independent risk management functions had lower aggregate...
