Using nationwide U.S. bank-level data from 2003-2007, this paper explores multiple dimensions of the financial performance of small business loans by means of statistical decompositions. I find systematic contrasts across small commercial loans of different sizes, which suggest dynamic changes...

Relaxing the common assumption of purely self-interested preferences in contests, it is shown that altruism (bilateral or unilateral) reduces equilibrium rent-seeking effort. The effects on net payoffs are more complex. Strategic interdependence is possible, but the symmetric equilibrium is pure...

Aggregate concentration may exacerbate systemic risk if the social cost of business failure is a superlinear function of the fraction of industry capacity lost to failure. This result suggests new empirical tests to inform policy debates, as well as supporting an efficiency rationale for...

The study tests whether removing bias can improve out-of-sample forecast accuracy in two series of interest rates. The samples are larger than previously studied in this context, and the test is cleaner since reported interest rates are never revised.

Even after controlling for other observable factors, reciprocal deposits are associated with higher bank risk as measured by the probability of failure and the Zscore. These results are consistent with the moral hazard hypothesis and reject the risk substitution hypothesis.

Standard early warning models to predict bank failures cannot be estimated during periods of few or zero failures, precluding any updating of such models during times of good performance. Here we address this problem using an alternative approach, forecasting the simple leverage ratio...

Economists have generally ignored the notion that perceived time may differ from clock time. Borrowing from the behavioral psychology literature, we investigate the case of time compression whereby perceived time passes more quickly than actual time. A framework is presented to embed time...

Motivated by the debate over similarities between the current and previous financial crises, logit estimates reveal significantly changed linkages between observable financial ratios and probabilities of subsequent bank failure using U.S. data from the 1980s and 2008.

This paper examines foreign institutional investors' portfolio allocation and performance in US securities. We test how information immobility, proxied by cultural and geographical distance between the investors' home markets and the US, influences portfolio strategies. Consistent with...