To measure tax burdens correctly, one should employ marginal rather than average tax rates. A new measure of the marginal effective tax rate on bank lending suggests that the tax burden on this activity has fallen modestly over the past ten years. This decline reflects the influence of the Tax...

Numerous accounts of derivatives-related losses experienced by established and reputable firms have raised concerns over the rapid growth of derivatives markets. Two of the largest derivatives-related losses to date involved Metallgesellschaft AG of Germany and Barings PLC of England, which both...

Virtually nonexistent a decade ago, the over-the-counter market for interest rate derivatives has grown at a phenomenal pace in recent years to become an increasingly important part of world securities markets. Although these instruments offer firms obvious benefits in managing their cash flows,...

The rapid growth of the market for interest rate swaps and other over-the-counter derivatives has spurred considerable controversy. Many observers have expressed concern that these instruments may increase risk and threaten the stability of financial markets. Current research into the uses of...

Deposit insurance, while reducing the threat of bank runs, also lessens bankers' incentives to control risks. Reforms of the deposit insurance system are necessary to discourage excessive risk taking such as characterized the recent S&L crisis. The adoption of market value accounting, early...