than out-of-the-money calls, suggesting a large crash risk of those currencies. To evaluate crash risk precisely, we …, forward, and option data, we obtain a real-time index of the compensation for global disaster risk exposure. We find that … disaster risk accounts for more than a third of the carry trade risk premium in advanced countries over the period examined …

We examine how the banking sector may ignite the formation of asset price bubbles when there is access to abundant … liquidity. Inside banks, given lack of observability of effort, loan officers (or risk takers) are compensated based on the … macroeconomic risk, investors reduce direct investment and hold more bank deposits. This ‘flight to quality’ leaves banks flush with …

economic growth. Investor protection is positively related to risk-sharing. As is standard in models of investment with risk …-averse agents, better protection (better risk sharing) results in a larger demand for capital. This is the demand effect. A second …

value, equity, and bond risk premia …

risk and uncertainty is implemented by applying the Gilboa-Schmeidler (1989) maxmin with multiple priors framework to … bailout uncertainty. (iii) Bailout uncertainty raises thelikelihood of bubbles, the amplitude of booms and busts as well as …