I model a financial market that dries out in the wake of premature liquidations. Two main results are obtained. First, liquidity may vanish even if small, riskneutral buyers could easily compensate the ongoing selling. Thus, more markets are vulnerable to quot;runsquot; than suggested by...

Using BoC-GEM-Fin, a large-scale DSGE model with real, nominal and financial frictions featuring a banking sector, we explore the macroeconomic implications of various types of countercyclical bank capital regulations. Results suggest that countercyclical capital requirements have a significant...

The recent financial crisis has shown that financial innovation can have devastating systemic impacts. International standard setters'' and national regulators'' response has been a global concerted effort to overhaul and tighten financial regulations. However, at a time of designing stricter...

This paper studies the quantitative asset pricing implications of financial intermediary which faces an endogenous leverage constraint. I use a recursive method to construct the global solution that accounts for occasionally binding constraint. Quantitatively, the model generates a high and...

This paper studies the effect of financial booms and extreme asset valuations on the relative demand for skills and the wage structure. The substantial rise in wage inequality in the U.S. since the late 1970s has been accompanied by a major expansion of financial services, a series of asset...

This paper examines whether the effect of fiscal policy on output depends on the size of the financial sector. We find that this relation depends on the level of economic development. In developing countries, fiscal multipliers are higher when the financial sector is larger. The opposite is true...

In this paper, we examine the influence of bank regulation, concentration, and financial and institutional development on commercial bank margins and profitability across a broad selection of Middle East and North Africa (MENA) countries. The empirical results suggest that bank-specific...

Motivated by the world-wide surge of FinTech lending, we analyze the implications of lenders' information technology adoption for financial stability. We estimate bank-level intensity of IT adoption before the global financial crisis using a novel dataset that provides information on hardware...

Sound and efficient functioning of financial systems is critical to the economic prosperity of any economy. This paper investigates the tripartite relationship between financial sector output, employment and economic growth in North Cyprus. Using relevant time series data analysis (within the...

There is growing evidence that the impact of financial development on economic growth might be non-linear and hump-shaped, exhibiting a turning point. However, such findings are typically established using total finances (mostly: credit), and the apparent non-linear impact of totals can stem...