Many writers have been quick to blame the high rate of foreclosures on subprime mortgages on what they call greedy, predatory lenders who exploited poor, unsophisticated and uneducated borrowers. The problem with this interpretation is that it cannot explain the behavior of foreclosure rates on...

What should investors do after a market crash? Whether stocks are likely to recover depends not on how much they declined, but rather, on why they declined. Perhaps surprisingly, it also depends on what you mean by “recover.”

This paper studies at the forbearance bet taken by policy makers at the end of the 1970s. We define forbearance as the failure of regulators to enforce book capital standards at the end of 1979. By comparing the cost of prompt regulatory intervention (defined here as closure or reorganization of...

The collapse of the Ohio Deposit Guarantee Fund in March 1985 provides a laboratory for examining the financial market's belief in the incentive-conflict model proposed by Kane (1989). Research in this area has yet to examine the stock returns of federally insured institutions during that period...

Research on moral hazard and adverse selection indicates that restricting the ability of lenders to price loans could result in less credit being extended to those in the riskiest credit tier. Given that blacks have worse credit than similarly situated whites, then they would be worse off if...

Borrowers realize statistically significant, positive abnormal returns around the announcement date of line-of-credit agreements with banks, and several explanations have been proposed. Little evidence exists, however, on the influence of these agreements on the counterparty, the lending...

The collapse of the Ohio Deposit Guarantee Fund in March 1985 provides a laboratory for examining the financial market's belief in the incentive-conflict model proposed by Kane (1989). Research in this area has yet to examine the stock returns of federally insured institutions during that period...

Each year, hundreds of millions of credit and debit cardholders make billions of transactions worth trillions of dollars. Yet few consumers are aware that such transactions travel through, and are made possible by, a highly evolved group of intermediaries. Those intermediaries sign up merchants...

Research on moral hazard and adverse selection indicates that restricting the ability of lenders to price loans could result in less credit being extended to those in the riskiest credit tier. This has several implications for mortgage lending and overages in particular. First, given that blacks...