Financial stability contributes to the stability and growth of a nation. There has been a sharp growth in use or trading of derivatives in both mature and emerging markets. The Zimbabwean financial sector is still not trading in derivatives security, yet Zimbabwe Stock Exchange is among the...

The recent report by Standards and poor has generated a lot of controversies. While some commentators are saying such report should be discarded others are clamouring for its proper perusal and examination. Investors are beginning to panic over their investments. The question in the lips of...

The issue of bank dividend regulation has become highly controversial as the stress induced on bank capital during the 2008 financial crisis and the covid pandemic created a demand for enhanced regulation and restrictions on bank dividend payments. This paper examines this issue from a...

Making use of a structural model that allows for optimal liquidity management, we study the role that repos play in a bank's financing structure. In our model the bank's assets consist of illiquid loans and liquid reserves and are financed by a combination of repos, long–term debt, deposits...

We analyze the impact of the Volcker Rule on a bank's earnings and default probability by using a stochastic control model where the bank maximizes its value by selecting an optimal dividend, recapitalization, and investment strategy. We calibrate the model to a sample of U.S. banks. Since the...

This paper studies the effects of bank payout restrictions, imposed during the COVID-crisis in 2020, on risk-shifting incentives within US banks. Using a high-frequency differences-in-differences empirical strategy, I show that when share buybacks are banned and dividends restricted for...

Bank payout policy is strongly affected by regulation and politics, especially for the largest banks. Banks, but not industrial firms, have consistently lower payouts in times of high regulation uncertainty and under democratic presidents. After the Global Financial Crisis, bank regulators'...

What are the effects of payout restrictions on bank risk-shifting? To answer this question, we exploit the restriction policies imposed during the Covid-crisis on US banks as a natural experiment. Using a highfrequency differences-in-differences empirical strategy, we show that, when share...

The unchecked build-up of imbalances during the 2000s exposed the euro area to the risk of sudden stops. Such risk materialized in 2009-10 and its consequences were amplified by the absence of adequate institutions. Europe embarked on a thorough process of reforming its economic governance. We...

This paper investigates the impact of banking prudential regulation on sovereign risk. We show that prudential regulation reduces sovereign risk and induces governments to spend more. As a result, countries with tight prudential regulation have lower primary budget balances and accumulate more...