The emergence of consumer credit issued on E-commerce platforms poses a new challenge for financial regulators. In the lens of a stylized model, this paper analyzes E-commerce consumer credit's economics and welfare implications. It highlights four points that warrant the particular attention of...

The shadow banking literature is anchored on the premise that shadow banking intensifies financial risks through its connection with regular banks. We document the importance of implicit guarantees as the risk transmission channel using a detailed micro-level data set on wealth management...

Consumer credit is now often instantly available on E-commerce platforms. This paper incorporates the liquidity provision into the consideration of platform competition. A platform needs to strike a balance between consumer rebates and consumer credit. We show that if there is an insufficient...

The U.S. could be the source of the global financial risk because it longs risky assets and shorts safe assets in the international capital market. This paper builds a stylized two-country model to highlight that when the developed country's risk-bearing capacity improves, it holds more foreign...

This paper introduces the probabilistic formulation of continuous-time economic models: forward stochastic differential equations (SDE) govern the dynamics of backward-looking variables, and backward SDEs capture that of forward-looking variables. Deep learning streamlines the search for the...

This paper demonstrates that the equilibrium dynamics of a continuous-time macro-finance model can be characterized by the probabilistic solution of a coupled forward-backward stochastic differential equation. The probabilistic approach can, to some extent, overcome the ``curse of...