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Legal academics, journalists, and senior executive branch officials alike have assumed that the cost of imposing new regulatory requirements is higher in severe recessions that drive the central bank's policy rate to zero than in other times. This is not correct; the aggregate output costs of...
Persistent link: https://www.econbiz.de/10014634827
I develop a framework of the buildup and outbreak of financial crises in an asymmetric information setting. In equilibrium, two distinct economic states arise endogenously: "normal times", periods of modest investment, and "booms", periods of expansionary investment. Normal times occur when the...
Persistent link: https://www.econbiz.de/10011880642
systemic risk, the article focuses on one critical aspect of hedge fund regulation, namely the choice between direct regulation … and indirect regulation. Having defined the distinction between direct and indirect regulation, also mapping its … implications in terms of regulatory techniques and instruments, the arguments for and against direct and indirect regulation of …
Persistent link: https://www.econbiz.de/10013035084
. This study relies on a survey of general literature on financial regulation, specific commentary on the hedge fund … regulatory reforms instituted, models of self-regulation, and analogous examples in other areas of financial regulation that have … taken a firm stance in not supporting hedge fund regulation. Congress, under Democratic control, has signaled that it is …
Persistent link: https://www.econbiz.de/10014219448
management practitioners in the financial industry and the regulator, to mitigate regulation risk. In its 2018 report, the High … the regulation itself. There would be a risk created by the regulation, a regulation risk.In this paper, it is argued that … a part of the observed short-termism on financial markets is indeed due to a regulation risk based on a falsehood way to …
Persistent link: https://www.econbiz.de/10013309432
We model the asset-opacity choice of an intermediary subject to rollover risk in wholesale funding markets. Greater opacity means investors form more dispersed beliefs about an intermediary’s profitability. The endogenous benefit of opacity is lower fragility when profitability is expected to...
Persistent link: https://www.econbiz.de/10011451106
crisis, recent advances in global liquidity regulation try to curb the excessive reliance on short-term wholesale funding … regulation may interfere with the central bank's influence on short-term money market rates. This paper tries to fill the gap in … asymmetric information. Regulation can be welfare-improving in the presence of an externality and also in case of collateral …
Persistent link: https://www.econbiz.de/10010342820
This paper reviews the theoretical literature at the intersection of macroeconomics and finance to draw lessons on the connection between vulnerabilities in the financial system and the macroeconomy, and on how monetary policy affects that connection. This literature finds that financial...
Persistent link: https://www.econbiz.de/10012819348
The main result in Svensson (2017) and its previous versions is that, given current knowledge and empirical estimates, the cost of using monetary policy to \lean against the wind" for financialstability purposes exceeds the benefit by a substantial margin. Adrian and Liang (2016a) conduct a...
Persistent link: https://www.econbiz.de/10011637310
This paper develops the building blocks for a legal theory of finance. LTF holds that financial markets are legally constructed and as such occupy an essentially hybrid place between state and market, public and private. At the same time, financial markets exhibit dynamics that frequently put...
Persistent link: https://www.econbiz.de/10013097823