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paper shows that financial regulation can be effective at mitigating this type of risk. Exploiting regulatory changes … introduced after the financial crisis as a natural experiment, I find that overconfidence-induced risk-taking decreases in … financial institutions subject to stricter regulation. Following the easing of these regulations, overconfidence-induced risk …
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The total effect of a regulatory change consists of direct effects and indirect effects (spillovers), but the standard difference-in-difference approach measures only direct effects and ignores potential indirect effects. By examining the short-sale aggressiveness during the 2007 full repeal of...
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In recent years, financial regulators have come under increasing judicial scrutiny for conducting inadequate cost/benefit assessments in advance of significant reforms. One facet of this scrutiny is judicial skepticism towards the proper role for regulatory experimentation (and the real option...
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