Hedge funds are significant players in the U.S. capital markets, but differ from other market participants in important ways such as their use of a wide range of complex trading strategies and instruments, leverage, opacity to outsiders, and their compensation structure. The traditional bulwark...

We study a contracting model for the determination of leverage and balance sheet size for financial intermediaries that fund their activities through collateralized borrowing. The model gives rise to two features: First, leverage is procyclical in the sense that leverage is high when the balance...

This paper explores the properties of using a generalized additive model with embedded variable selection for the prediction of bankruptcy. The main purpose is to explore an innovative way to close the gap between interpretation and prediction that has prevented widespread use of methods based...