It has become almost conventional wisdom that investors should avoid funds with high expense ratios. Like many nuggets of conventional wisdom, there is some truth, but many exceptions: some of the best funds come at the price of higher expense ratios. Financial planners need this type of...

The majority of commentators, along with the public opinion, are inclined to identify the causes of the last financial crisis in a combination of traditional market and regulatory failures in the operation and regulation of financial markets. Whatever cannot be explained along these lines is...

Financial regulation today is largely framed by traditional business categories. The financial markets, however, have begun to bypass those categories, principally over the last thirty years. Chief among the changes has been convergence in the products and services offered by traditional...

We present a quantitative study of the evolution of markets and models during the recent crisis. In particular, we focus on the fixed income market and we analyze the most relevant empirical evidence regarding the divergence between Libor and OIS rates, the explosion of basis swaps spreads, and...

The financial crisis of 2007-2008 was a liquidity crisis. Thus we must both study the source of the crisis and evaluate the regulatory measures to address it. How was this liquidity crisis and its associated risk related to other forms of risk? What was the nature of the vicious cycle that...

The stunning failure of a number of banks during the recent crisis has put regulatory intervention high on the agenda of governments. Adequate risk monitoring, including by credit rating agencies, measurement, and management have proven to be a daunting task, whereas regulation of innovative...

Corporate restructuring, by addressing the excess capacity and debt overhang problems currently plaguing Japan’s corporate sector, is a key element in revitalizing the country’s economy. Towards this end, Japanese firms have been adopting new business practices and the government has...

Since the late 1980s New Zealand (NZ) has often been heralded for its free-market approach and laissez-faire attitude towards regulations in the financial market. We find that private placements issued at a premium to current market price exhibit a permanent positive impact on firm value. In...

Finance is an important component of development, including for the poor. Indeed, much recent empirical evidence has shown that a more developed financial system can help reduce poverty and lower income inequality. In addition to facilitating overall economic growth, finance can help individuals...

The Basel II accord encourages banks to develop their own advanced measurement approaches (AMA). However, the paucity of loss data implies that an individual bank cannot obtain a probability distribution with any reliability. We propose a model, targeting the regulator initially, by obtaining a...