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Social and Behavioral Sciences Commons™
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Articles 1 - 8 of 8
Full-Text Articles in Social and Behavioral Sciences
The Financial Crisis And Credit Unavailability: Cause Or Effect?, Steven L. Schwarcz
The Financial Crisis And Credit Unavailability: Cause Or Effect?, Steven L. Schwarcz
Faculty Scholarship
Although the relationship between credit availability and financial decline leading to the global financial crisis was somewhat interactive, a loss of credit availability appears to have caused the financial crisis more than the reverse. The potential for credit unavailability to cause a financial crisis suggests at least three lessons: (i) because credit availability is dependent on financial markets as well as banks, regulation should protect the viability of both credit sources; (ii) diversifying sources of credit might increase financial stability if each credit source is robust and does not create a liquidity glut or inappropriately weaken central bank control; and …
How To Restructure Venezuelan Debt (¿Cómo Restructurar La Deuda Venezolana?), Mitu Gulati, Lee C. Buchheit
How To Restructure Venezuelan Debt (¿Cómo Restructurar La Deuda Venezolana?), Mitu Gulati, Lee C. Buchheit
Faculty Scholarship
English Abstract: There is a growing consensus that Venezuela will not be able to persist for much longer with its policy of full external debt service. The social costs are just too great. This implies a debt restructuring of some kind. Venezuela, principally through its state-owned oil company, Petróleos de Venezuela, S.A. (“PDVSA”), has extensive commercial contacts with the United States. Not since Mexico in the 1980s has an emerging market country with this level of commercial contacts attempted to restructure its New York law-governed sovereign debt. Holdout creditors in a restructuring of Venezuelan sovereign debt will therefore present a …
Talking One's Way Out Of A Debt Crisis, Lee C. Buchheit, G. Mitu Gulati
Talking One's Way Out Of A Debt Crisis, Lee C. Buchheit, G. Mitu Gulati
Faculty Scholarship
The policy of Euro-area officialdom in the period 2010-2011 was to avoid, at all costs, a default and restructuring of the sovereign debt of a member of the monetary union. This policy was motivated principally, but not exclusively, by a fear that the international capital markets, if forcibly reminded of the precarious position of overindebted, growth-challenged members of a monetary union, might recoil generally from lending to European sovereigns. In short, they feared contagion.
The only alternative to permitting a debt restructuring, of course, was an official sector bailout. The afflicted countries -- Greece (until 2012), Portugal, Ireland and Cyprus …
Shadow Banking And Regulation In China And Other Developing Countries, Steven L. Schwarcz
Shadow Banking And Regulation In China And Other Developing Countries, Steven L. Schwarcz
Faculty Scholarship
The rapid but largely unregulated growth in shadow banking in developing countries such as China can jeopardize financial stability. This article discusses that growth and argues that a regulatory balance is needed to help protect financial stability while preserving shadow banking as an important channel of alternative funding. The article also analyzes how that regulation could be designed.
From Pigs To Hogs, Stephen J. Choi, Mitu Gulati
From Pigs To Hogs, Stephen J. Choi, Mitu Gulati
Faculty Scholarship
The question of whether, and to what extent, markets price contract terms in government bond issues has been one of considerable debate in the literature. We use a natural experiment thrown up by the Euro area sovereign debt crisis of 2010-2013 to test whether a particular set of contract terms – ones that gave an advantage to sovereign guaranteed bonds over garden variety sovereign bonds – was priced. These contract terms turned out to be important for the holders of guaranteed bonds during the Greek debt restructuring of 2012, where they helped the holders of guaranteed bonds escape the haircut …
Regulating Ex Post: How Law Can Address The Inevitability Of Financial Failure, Iman Anabtawi, Steven L. Schwarcz
Regulating Ex Post: How Law Can Address The Inevitability Of Financial Failure, Iman Anabtawi, Steven L. Schwarcz
Faculty Scholarship
Unlike many other areas of regulation, financial regulation operates in the context of a complex interdependent system. The interconnections among firms, markets, and legal rules have implications for financial regulatory policy, especially the choice between ex ante regulation aimed at preventing financial failure and ex post regulation aimed at responding to that failure. Regulatory theory has paid relatively little attention to this distinction. Were regulation to consist solely of duty-imposing norms, such neglect might be defensible. In the context of a system, however, regulation can also take the form of interventions aimed at mitigating the potentially systemic consequences of a …
The Broken Safety Net: A Study Of Earned Income Tax Credit Recipients And A Proposal For Repair, Sara Sternberg Greene
The Broken Safety Net: A Study Of Earned Income Tax Credit Recipients And A Proposal For Repair, Sara Sternberg Greene
Faculty Scholarship
The Earned Income Tax Credit (EITC) is the largest federal antipoverty program in the United States and garners almost universal bipartisan support from politicians, legal scholars, and other commentators. However, assessments of the EITC missed an imperative perspective: that of EITC recipients themselves. Past work relies on largely unconfirmed assumptions about the behaviors and needs of low-income families. This Article provides a novel assessment of the EITC based on original data obtained directly from 194 EITC recipients through in-depth qualitative interviews. The findings are troubling: They show that while the EITC has important advantages over welfare, which it has largely …
Club Goods And Group Identity: Evidence From Islamic Resurgence During The Indonesian Financial Crisis, Daniel L. Chen
Club Goods And Group Identity: Evidence From Islamic Resurgence During The Indonesian Financial Crisis, Daniel L. Chen
Faculty Scholarship
This paper tests a model in which group identity in the form of religious intensity functions as ex post insurance. I exploit relative price shocks induced by the Indonesian financial crisis to demonstrate a causal relationship between economic distress and religious intensity (Koran study and Islamic school attendance) that is weaker for other forms of group identity. Consistent with ex post insurance, credit availability reduces the effect of economic distress on religious intensity, religious intensity alleviates credit constraints, and religious institutions smooth consumption shocks across households and within households, particularly for those who were less religious before the crisis.