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...
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...
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...
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...
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...
The Wealth Effect: How the Great Expectations of the Middle Class Have Changed the Politics of Banking Crises
The politics of major banking crises has been transformed since the nineteenth century. Analyzing extensive historical and contemporary evidence...
Financial Transaction Taxes and the Informational Efficiency of Financial Markets: A Structural Estimation
We develop a new methodology to estimate the impact of a financial transaction tax (FTT) on informational efficiency, liquidity and volatility. In our...
Cryptocurrencies: Financial stability and fairness
Cryptocurrencies are primarily held today for speculative reasons and see little economic use outside of that. This column argues that if private...
Cryptocurrencies: Policy, economics and fairness
Cryptocurrencies promise to replace fiat money with private money whose integrity is underpinned by algorithms, not government guarantees. While the...
Domestic banks as lightning rods? Home bias and information during Eurozone crisis
European banks have been criticized for holding excessive domestic government debt during economic downturns, which may have intensified the diabolic...
Asset Encumbrance, Bank Funding and Fragility
We model asset encumbrance by banks subject to rollover risk and study the consequences for fragility, funding costs, and prudential regulation. A...
Ten Years After the Global Financial Crisis: Causes, Outcomes, Lessons Learnt
September 15th, 2008: financial services firm Lehman Brothers files for Chapter 11 bankruptcy protection, marking the largest default in U.S. history...
The hierarchy of financial policies
Financial policy is determined in multiple domains by separate government authorities. This column explores the hierarchical ranking of these domains...
