This study investigates whether banks and insurance corporations perform regulatory arbitrage by buying bonds with inflated credit ratings. We argue that credit rating based capital requirements incentivize banks and insurance corporations to hold more bonds with inflated credit ratings. We...

Counter cyclical long-term investment strategies of insurance companies and pension funds (ICPFs) can support the stability of the financial system. Yet there is limited understanding of how ICPFs invest during market shocks, such as the global financial crisis and the European sovereign debt...

I use detailed data on bond and swap positions of pension funds and insurance companies (P&Is) in the Netherlands to study demand shifts and their causal effect on government bond yields. In particular, I exploit a reform in the regulatory discount curve that makes liabilities more sensitive to...

Using fourteen years of data on Dutch consumers' trust in financial institutions, we find that financially literate consumers are more likely to trust banks, insurance companies and pension funds, and the competence and integrity of the managers of these institutions. This holds both for...

Trust in financial institutions is widely considered important. However, a clear overview of studies on the drivers of trust is missing. We intend to fill this gap in the literature. After discussing why trust in financial institutions is important, we turn to its measurement, where we...

Using two large-scale surveys among households, we examine the drivers of trust in banks, insurance companies, BigTechs, and other people in the United States and the Netherlands, and analyse whether the COVID-19 pandemic has affected public trust. Our results suggest that the COVID-19 pandemic...

The COVID-19 pandemic has increased our online presence and unleashed a new discussion on sharing sensitive personal data. Upcoming European legislation will facilitate data sharing in several areas, following the lead of the revised payments directive (PSD2), which enables payments data sharing...

We conduct a laboratory experiment to examine under which circumstances a depositor-run at one bank may lead to a depositor-run at another bank. We implement two-person coordination games which capture the essence of the Diamond-Dybvig (1983) bank-run model. Subjects in the roles of followers...

The paper studies risk mitigation associated with capital regulation, in a context where banks may choose tail risk assets. We show that this undermines the traditional result that higher capital reduces excess risk-taking driven by limited liability. Moreover, higher capital may have an...

This paper experimentally studies the impact of uncertainty about bank and borrower fundamentals on loan repayment. We find that solvent borrowers are more likely to default strategically when stricter disclosure creates common knowledge about bank weakness. Borrowers are also less likely to...