Many have claimed that credit default swaps (CDSs) have lowered the cost of debt financing to firms by creating new hedging opportunities and information for investors. This paper evaluates the impact that the onset of CDS trading has on the spreads that underlying firms pay to raise funding in...

We provide an overview of the rapidly evolving literature on shadow credit intermediation. The shadow banking system consists of a web of specialized financial institutions that conduct credit, maturity, and liquidity transformation without direct, explicit access to public backstops. The lack...

This paper investigates whether the type of institutional affiliation of a collateralized loan obligation (CLO) manager influences the manager's access to information and risk appetite. We base our investigation on CLO managers' trading of distressed loans. Our findings reveal that CLO managers...

Using information from bonds issued over the past twenty years, this study finds that the largest banks have a cost advantage vis-à-vis their smaller peers. This cost advantage may not be entirely due to investors' belief that the largest banks are “too big to fail” because the study also...

This paper investigates the incentives for banks to bias their internally generated risk estimates. We are able to estimate bank biases at the credit level by comparing bank-generated risk estimates within loan syndicates. The biases are positively correlated with measures of regulatory capital,...

This paper investigates the incentives for banks to bias their internally generated risk estimates. We are able to estimate bank biases at the credit-level by comparing bank generated risk estimates within loan syndicates. The biases are positively correlated with measures of regulatory capital,...