In this paper we develop a simple model of the relationship between financial market development and investment by entrepreneurs in the presence of a Central Bank. The model analyzes how the level of financial development affects the way credit spreads, and therefore the volume of credit and...

Based on a large sample of publicly listed and non-listed US commercial banks from 1996 to 2011, we find robust evidence consistent with banks using realized available for sale (AFS) securities gains and losses to smooth earnings and increase low regulatory capital. We also find (i) banks with...

In this paper we analyze the degree to which European economies are hit by symmetric shocks. We study shocks that lead to an increased volatility of the interest rate and model the behavior of European short term interest rates as having two regimes that correspond to high and low volatility of...

This paper analyzes the recent behavior of stock markets in four European countries. More specifically, we describe the bull and bear phases of those markets, comparing some of their more relevant features across countries and with those of the US. We also comment on the degree of concordance of...

We present and estimate, using nonparametric regression techniques, a model of short term interest rate dynamics and use the estimation to value bonds. We study the case of two European countries - Spain and Italy - that belong to EMU, and compare the resulting bond prices of a one factor model...

Previous work has analyzed the disciplinary role of equity and debt markets on banks and how banks use of accounting discretion to try to reduce this discipline. In this study, we put together data for all U.S. private banks to show that deposit growth is an additional motivation for banks to...

Is the degree of dollarization important to determine the pass-through between nominal exchange rate depreciation and inflation? The common view in the literature is that countries with higher dollarization exhibit higher pass-through coefficients. In our study we qualify this common view. Using...

In this paper we analyze the behavior of stock markets in six emerging countries. More specifically, we describe the bull and bear cycles of four Latin American and two Asian countries, comparing their characteristics during both phases and the degree of concordance of bullish periods. We divide...

We show that two types of consumption risk are priced in the equity premium: the risk of aggregate consumption growth and that of changing the composition of the consumption basket, when goods have heterogeneous costs of adjustment. We use the property that the frequency of consumption...