Empirical confirmation that the effect of macroeconomic fundamentals on exchange rates is economically important has been scarce. This paper employs a general GARCH specification with asymmetric responses to investigate the effect of 35 U.S. and German macroeconomic news announcements on the...

The Basel framework has produced complex definitions of “adequate” capital, expressed in terms of book (accounting) ratios. However, solvency actually depends not on accounting ratios but on private investors' valuation of the firm's assets' and liabilities' market values. At large banking...

We evaluate U.S. firms' leverage determinants by studying how 1,801 firms paid for 2,073 very large investments during the period 1989-2006. This approach complements existing empirical work on capital structure, which typically estimates regression models for a broad set of CRSP/Compustat...

Because the personal tax treatments of interest and dividend income likely affect the relative cost of debt and equity financing, a sharp change in tax treatment could affect firms' optimal leverage. This paper examines the effect of the 2003 equity income tax cut on firms' debt usage. Because...

Payday lenders advance small, short-term consumer loans through convenient storefront shops with limited underwriting. However, their fees convert to very high annualized rates of interest (APR's 390%). Using proprietary, store-level data, we find that a store's age importantly affects its...

The financial crisis has clearly indicated that government regulators are reluctant to permit a large financial institution to fail. In order to minimize the transfer of future losses to taxpayers or to solvent banks, we need a system for assuring that large institutions always maintain...

We analyze credit line characteristics and changes in cash for a panel of firms over 1996-2006, and find evidence consistent with the economic importance of transactions costs for the management of liquidity and the resulting effects on shareholder value. We find that shareholders of...

Researchers have recently studied the interactions between corporate and government bond issuances within many countries. Some conclude that government bonds compete with private bond issuances, while others maintain that government bonds provide valuable reference entities that improve the...

We use Monthly Interest Rate Survey (MIRS) data for April 1997 through May 2003 to estimate the effect of conforming status on the effective interest rate for 30-year fixed-rate mortgages. We show that plausible econometric refinements materially affect the jumbo-conforming spread as measured in...

We assemble a sample of 1,558 large investments made by 1,185 firms over the period 1989-1999, and study two main issues: How do firms pay for these large investments? And how does the stock market subsequently evaluate them? We find that major investments are mostly externally financed. The...