Financial instability transition under heterogeneous investments and portfolio diversification
We analyze the stability of financial investment networks, where financial institutions hold overlapping portfolios of assets. We consider the effect...
India’s Unified Payments Interface (UPI) system and its transformative impact on the economy
India’s Unified Payment Interface (UPI) is an example of how an innovative payments and settlement system can initiate an economy wide transformation...
Artificial intelligence and stability
Financial institutions are rapidly embracing AI – but at what cost to financial stability? This column argues that AI introduces novel stability risks...
The one-in-a-thousand-day problem
Financial crises usually inflict the most damage when banks suddenly shift from pursuing profits to survival. This column argues that such drastic...
Phase transitions in debt recycling
Debt recycling is an aggressive equity extraction strategy that potentially permits faster repayment of a mortgage. While equity progressively builds...
Research highlight
Unbundling Quantitative Easing: Taking a Cue from Treasury Auctions
Journal of Political Economy, 132 (9), 3115-3172
Credibility, trust, and perception of authorities’ performance
The credibility of an institution is, almost, synonymous with how well it is trusted. This column uses survey data to examine how trust in various...
Latent fragility: Conditioning banks' joint probability of default on the financial cycle
Journal of International Money and Finance, 146, 103107
How the financial authorities can respond to AI threats to financial stability
Artificial intelligence can act to either stabilise the financial system or to increase the frequency and severity of financial crises. This second...
AI financial crises
The rapid adoption of artificial intelligence is transforming the financial industry. This first of a two-column series argues that AI may either...
Research highlight
High-frequency trading in the stock market and the costs of options market making
Journal of Financial Economics, 159, 103900
Why so many crises happen when we know why they happen and how to prevent them
Financial crises are not complicated, and many claim to know why they happen and how to prevent them. Why then do they happen with such alarming...
Unintended Consequences of Holding Dollar Assets
We examine a novel mechanism whereby the US dollar’s global dominance can have a large, unexpected impact on foreign Treasury yields in crisis periods...
Correlation between upstreamness and downstreamness in random global value chains
This paper is concerned with upstreamness and downstreamness of industries and countries in global value chains. Upstreamness and downstreamness...
The continuing financial fragility of banks
Banks remain fragile, which could be reduced if they held more equity and less debt. Bankers, however, fear this could affect their compensation...
