Many observers have argued that credit default swaps contributed significantly to the credit crisis. Of particular concern to these observers are that credit default swaps trade in the largely unregulated over-the-counter market as bilateral contracts involving counter-party risk and that they...

Though overall bank performance from July 2007 to December 2008 was the worst since the Great Depression, there is significant variation in the cross-section of stock returns of large banks across the world during that period. We use this variation to evaluate the importance of factors that have...

A review of the 2007-2008 financial crisis is conducted. We synthesize the insights provided by literature on the impact of this crisis on the United States and other countries. The extant literature on the policies undertaken by policymakers in United States and Europe and their global impact...

In the thirteen years since the onset of 2007-2008 financial crisis, economists and researchers have thoroughly investigated the financial crisis. We conduct a selective review of the extant literature on the financial crisis, with special emphasis on the US mortgage markets, as they were the...

Many observers have argued that the fall in RMBS prices during the crisis was partly caused by fire sales. We provide an explanation for why financial institutions may have engaged in fire sales using a unique dataset of RMBS transactions for insurance companies. We show that risk-sensitive...

U.S. House of Representatives Financial Services Committee considered many important banking reforms in 2009-2010 including the Dodd-Frank Act. We show that during this period, the foreclosure starts on delinquent mortgages were delayed in the districts of committee members even though there was...

This paper shows, for the first time, how liquidity infusions from government bailouts affect loan modification in the mortgage market. The design of the Pooling and Service Agreement leads mortgage servicers to prefer foreclosure to modification when the servicers are liquidity constrained....

We investigate why only some banks use regulatory arbitrage. We predict that banks wanting to be riskier than allowed by capital regulations (constrained banks) use regulatory arbitrage while others do not. We find support for this hypothesis using trust preferred securities (TPS) issuance, a...

How does a bank react when a substantial share of its borrowers suffer a large negative shock? To answer this question we exploit the 2014 collapse of energy prices using the universe of Mexican commercial bank loans. We show that, after the drop in energy prices, banks exposed to the energy...