Finance and Financial Management Commons^™

Lessons Learned: Susan Mclaughlin, Matthew A. Lieber

Journal of Financial Crises

A veteran staff member of the Federal Reserve Bank of New York (FRBNY), Susan McLaughlin served as head of the discount window and chief operating officer of the FRBNY’s Markets Trading Desk during the Global Financial Crisis. She was centrally involved in the Fed’s policy response to the disruptions to secured and unsecured funding markets during 2007–2008. Following the crisis, McLaughlin coordinated an effective Fed initiative to reform the triparty repurchase agreement (repo) market’s settlement infrastructure. The Fed’s reform efforts, engaging the financial industry under FRBNY president Bill Dudley, were instrumental in im-proving the stability of the funding market. This …

Lessons Learned: Kieran J. Fallon, Matthew A. Lieber

Journal of Financial Crises

Presently the senior deputy general counsel for regulation and government affairs at PNC Fi-nancial Services Group, Kieran Fallon completed a 16-year tenure in the legal division of the Board of Governors of the Federal Reserve System in 2011. As associate general counsel dur-ing the Global Financial Crisis (GFC), he helped design the Federal Reserve’s Commercial Pa-per Funding Facility, restructure American International Group (AIG), and implement the Dodd-Frank Act. Relatedly, Fallon also served as general counsel for the Financial Stability Oversight Board from 2008 to 2011. This Lessons Learned is based on an interview conducted with Fallon on August 13, 2020.

Lessons Learned: Steven B. Kamin, Yasemin Sim Esmen

Journal of Financial Crises

Steven B. Kamin was the deputy director of the division of international finance at the Federal Reserve Board during the Global Financial Crisis (GFC) and was appointed director in 2011. He was responsible for research, policy analysis, and reporting in the areas of foreign economic activity, US external trade and capital flows, and developments in international financial markets and institutions. This Lessons Learned is based on an interview conducted with Kamin on August 16, 2019.

Lessons Learned: Seth Carpenter, Maryann Haggerty

Journal of Financial Crises

Seth Carpenter was a senior staff member of the Division of Monetary Affairs at the Federal Reserve Board during the 2007–09 Global Financial Crisis (GFC), meaning he was part of the team that advised the Board of Governors and members of the Federal Open Market Committee (FOMC) in setting monetary policy. He led the Board team that worked daily with the Open Market Trading Desk at the Federal Reserve Bank of New York to implement policy. He left the Federal Reserve System as deputy director of monetary affairs in 2014 to work at the US Department of the Treasury, where …

Lessons Learned: Tim Clark, Lynnley Browning

Journal of Financial Crises

During the Global Financial Crisis of 2007–09, Tim Clark was senior adviser in the Division of Banking Supervision and Regulation at the Board of Governors of the Federal Reserve System. Clark was a chief architect of the Federal Reserve’s capital and liquidity stress tests that helped to stabilize the banks. He was also one of the leaders behind the implementation of the Dodd-Frank Act and other reforms at the Federal Reserve, and ultimately served as deputy director of the Division for Supervision and Regulation. This abstract is based on an interview with Clark that occurred on December 13, 2019.

The Internal Capital Markets Of Global Dealer Banks, Arun Gupta

Journal of Financial Crises

This study uncovers the existence of a trillion-dollar internal capital market that played a central role in the financing of dealer banks during the 2007–09 Global Financial Crisis. Hand-collecting a novel set of dealer microdata at the subsidiary level, I present a unique set of facts on the evolution of inter-affiliate loans between US primary dealers and their (primarily foreign) siblings. First, the aggregate size of these dealer internal capital markets quadrupled from $335 billion in 2001 to $1.2 trillion by 2007. Second, 25 percent of total repurchase agreements and 62 percent of total securities lending reported on US primary …

Lessons Learned: John Bovenzi, Sandra Ward

Journal of Financial Crises

As a deputy to the chairman of the Federal Deposit Insurance Corporation (FDIC) and in his role as chief operating officer of the agency, John Bovenzi provided policy advice and oversaw the agency’s operations, including business lines, bank supervision, bank closings, deposit insurance, and administrative affairs. Bovenzi’s most notable role during the Global Financial Crisis was manning the helm of mortgage lender IndyMac after the FDIC took it over in July 2008 to position it for a sale. This abstract is based on an interview with Bovenzi conducted on December 2, 2020

From Lost Turnover To Nonperforming Loans: The Impact Of The Covid-19 Pandemic On The Economy And On The Financial System, Antonio Sánchez Serrano

Journal of Financial Crises

The COVID-19 pandemic created an unprecedented economic shock across the world. As a result of the coronavirus outbreak and the related health measures, nonfinancial corporations providing nonessential goods or services that cannot be consumed remotely have experienced a large decrease in their turnover. Using balance sheets and flows statements, we are able to quantify the impact of the pandemic on nonfinancial corporations and households, according to several scenarios for the pandemic over 2021. The impact is largely heterogeneous across sectors and amounts to up to 20% of the turnover for euro area nonfinancial corporations. Stress in these corporations and households …

Managing External Volatility: Policy Frameworks In Non-Reserve-Issuing Economies, Hélène Poirson, Nathan Porter, Ghada Fayad, Itai Agur, Ran Bi, Jiaqian Chen, Johannes Eugster, Stefan Laseen, Jeta Menkulasi, Kenji Moriyama, Céline Rochon, Katsiaryna Svirydzenka, Camilo Tovar, Zhongxia Zhang, Aleksandra Zdzienicka

Journal of Financial Crises

Since the Global Financial Crisis, non-reserve-issuing economies (NREs) have been highly sensitive to episodes of external pressures. With monetary policy independence constrained by this sensitivity, many NREs have utilized other policy instruments. This paper confirms the vulnerability of NREs to external shocks and finds that, in some circumstances, managing such shocks with multiple instruments can both lessen the policy response required from any one policy tool to financial and external shocks and increase the effectiveness of policies in stabilizing macrofinancial conditions. Effectiveness, however, does not always imply appropriateness, which rests on an evaluation of potential trade-offs and unintended consequences.

Financial Crises And Legislation, Peter Conti-Brown, Michael Ohlrogge

Journal of Financial Crises

Scholars frequently assert that financial legislation in the United States is primarily crisis driven. This “crisis-legislation hypothesis” is often cited as an explanation for various supposed shortcomings of US financial legislation, including that it is poorly conceived and inadequate to the problems it aims to address. Other scholars embrace the hypothesis, but from the perspective that crises are the needed impetus to prompt constructive reforms. Despite the prevalence of this hypothesis, however, its threshold assumption—that Congress passes major financial legislation only when financial crises arise—has never been analyzed empirically. This article provides that analysis. We first devise a new system …

A Study On The Mechanisms Of Shareholders’ Equity Adjustment In Bankruptcy Reorganization Of Listed Companies, Yongliang Zhang

Dissertations and Theses Collection (Open Access)

In recent years, amid cyclical macroeconomic fluctuations, national economic slowdown, economic restructuring, and over-expansion of some enterprises, a number of listed companies have faced serious debt and operational challenges, many of which are worthy of keeping afloat. From June 1, 2007 when the Enterprise Bankruptcy Law of the People’s Republic of China came into effect, up to the end of 2021, a total of 93 listed companies in China have gone through bankruptcy reorganization, one of the major means to save the listed companies in distress.

The bankruptcy reorganization of listed companies, by its nature, is a process of game …

A Study On The Impact Of Technological Innovation Attributes On Listing Success Rate And Post-Listing Performance, Yijun Xu

Dissertations and Theses Collection (Open Access)

"Key and core technology" enterprises form the backbone of great powers. China’s STAR Market (technological innovation board) is committed to implementing strategies that will lead to technological innovation-driven sustainable development and strengthen the country by building a secure and independent industrial chain that can support the development of cutting-edge technology. From the outset, the STAR Market put forward clear requirements for "key and core technology" enterprises. The technological innovation attributes of the enterprises listed on the STAR Market are the most essential core characteristics, but a question arises as to how best to evaluate their technological innovation attributes. Are these …

Essays In Asset Pricing, Muhammed Yonac

Dissertations, Theses, and Capstone Projects

This dissertation consists of three essays in asset pricing with the common theme of return predictability.

Chapter 1: This chapter introduces the motivation, results, and structure of the dissertation.

Chapter 2: I examine the relation between the social ties between firms' headquarters locations and co-movements between their fundamentals and stock returns. The evidence indicates that firms in the same industry with socially connected locations exhibit co-movement in fundamentals and stock returns that exceed those without socially connected locations. However, the stock returns reflect the location information with a lag. To exploit this lagged relationship, we form portfolios that buy (sell) …

The Euro And Bumps In The Road: Historical Patterns Of Nonresident Holdings In Eurozone Bonds, 1980–2018, Michael H. Scarlatos

Dissertations, Theses, and Capstone Projects

A developed bond market which attracts nonresident investors both enables and reflects a host currency’s transition from domestic to international status. My analysis of historical private nonresident holdings of Eurozone portfolio debt securities spanning the euro’s 1999 creation and its subsequent 2008 crisis reveals diverging patterns.

This analysis, complemented by coefficient stability tests, discovers that the conversion of national currencies to the euro was reflected by a pickup in nonresident holdings of bonds issued by countries adopting the euro, especially those of the periphery (Portugal, Ireland, Italy and Spain) relative to the core (Germany, Austria, Belgium, Finland, France, and the …

Overnight Returns, Daytime Reversals, And Future Stock Returns, Ferhat Akbas, Ekkehart Boehmer, Chao Jiang, Paul D. Koch

Research Collection Lee Kong Chian School Of Business

A higher frequency of positive overnight returns followed by negative trading day reversals during a month suggests a more intense daily tug of war between opposing investor clienteles, who are likely composed of noise traders overnight and arbitrageurs during the day. We show that a more intense daily tug of war predicts higher future returns in the cross section. Additional tests support the conclusion that, in a more intense tug of war, daytime arbitrageurs are more likely to discount the possibility that positive news arrives overnight and thus overcorrect the persistent upward overnight price pressure.

From ‘Homo Economicus’ To ‘Homo Culturalis’: Review Of Irrationally Rational By V. Raghunathan, Milind M. Shrikhande

Markets, Globalization & Development Review

No abstract provided.

Skbi Big 5 Survey 2022 August, Singapore Management University

Sim Kee Boon Institute for Financial Economics

The latest survey results on the largest five economies (Big5) were revised markedly relative to the prior release (pre-Russia-Ukraine conflict), generally indicating weaker growth and higher inflation coupled with incremental ambiguity on the policy front.

Obstacles To Domestic Retail Investing : Evidence From Mexico, Kenneth Bulko

Legacy Theses & Dissertations (2009 - 2024)

Despite efforts to improve investment behavior, equity participation worldwide remains low. Researchers have attempted to explain the reluctance to purchase risky assets by seeking to identify the barriers investors face during the investment process. However, past empirical results relied on data often collected as part of a larger investigation and not explicitly centered on barriers to investing. We seek to deepen the understanding of investor behavior with qualitative and qualitative research designed to specifically identify the obstacles typically faced by potential investors, with a particular focus on Mexico.

International Asset Pricing With Strategic Business Groups, Massimo Massa, Hong Zhang, Hong Zhang

Research Collection Lee Kong Chian School Of Business

Firms in global markets often belong to business groups. We argue that this feature can have a profound influence on international asset pricing. In bad times, business groups may strategically reallocate risk across affiliated firms to protect core “central firms.” This strategic behavior induces co-movement among central firms, creating a new intertemporal risk factor. Based on a novel data set of worldwide ownership for 2002–2012, we find that central firms are better protected in bad times and that they earn relatively lower expected returns. Moreover, a centrality factor augments traditional models in explaining the cross section of international stock returns.

Customer Concentration And Corporate Carbon Emissions, Saiying Deng, Tinghua Duan, Frank Weikai Li, Xiaoling Pu

Research Collection Lee Kong Chian School Of Business

This paper examines whether economic links with major corporate customers curb corporate carbon emissions. We show that supplier firms with a concentrated customer base have significantly lower carbon emissions. The baseline results are robust to alternative measures of carbon emissions and customer concentration, and various approaches that mitigate endogeneity concerns due to omitted variables and reverse causality. Moreover, the curbing effect of customer concentration on supplier carbon emissions is more pronounced in firms facing lower customer switching costs, with less (more) supplier (customer) bargaining power, fewer redeployable assets, operating in more carbon-intensive industries, and after the Paris Agreement of 2015. …

Three Chapters On Investments And Financial Institutions, Cao Fang

Graduate Theses and Dissertations

Only the stock selection (“alpha”) decisions of fund managers who trade on firm-specific information should have predictive return content. Faced with the same information, skilled fund managers make similar stock selection decisions. In Chapter one, we introduce a new measure - stock investment quality - which uses fund quality to weight asymmetries in private information reflected in deviations of fund from peer group ownership on stocks in a style segment. We show stocks ranked high on investment quality generate significantly higher excess returns that persist through the ensuing year. The positive investment quality–future return relationship is robust to alternative fund …

The Cryptocurrency Participation Puzzle, Ran Duchin, David H. Solomon, Jun Tu, Xi Wang

Research Collection Lee Kong Chian School Of Business

We show that ongoing zero portfolio weights in cryptocurrency are surprisingly difficult to generate in a standard Bayesian portfolio theory framework. With ten years of prior data, equity market investors would need very pessimistic priors on mean returns to justify never having bought cryptocurrency: -10.6% per month for Bitcoin, and -19.6% per month for a diversified portfolio of cryptocurrencies. Moreover, most priors that involve never purchasing cryptocurrency imply that investors should short cryptocurrency. Optimal absolute weights are generally small but non-trivial (1-5%), frequently positive, and fairly smooth despite returns being volatile. Under a wide range of priors, the certainty equivalent …

Does The Financial Experience Of Sec Regional Directors Impact Sec Investigations Into Reporting Entities?, James Justin Blann

Graduate Theses and Dissertations

The SEC’s Division of Enforcement is frequently criticized for its lack of oversight effectiveness, and certain vocal critics attribute this to a lack of financial experience within the SEC. Using hand-collected data on SEC regional directors, I find that the majority of these SEC officials lack financial experience. I then examine whether the financial experience of SEC regional directors impacts SEC investigations into reporting entities. Consistent with financial experience equipping directors to better process complex financial transactions and reports, I find that directors with financial experience open public company investigations 29 percent more often and conduct these investigations 34 percent …

Inflation Expectations Can Be A Self-Fulfilling Prophecy, Aurobindo Ghosh, Khyati Chauhan, Muskan Bagrodia

Research Collection Lee Kong Chian School Of Business

In a commentary, SMU Assistant Professor of Finance (Education) Aurobindo Ghosh, SMU postgraduate student and Research Assistant for the SInDEx Project Muskan Bagrodia and International Monetary Fund Economic Research Assistant Khyati Chauhan weighed in on why inflation expectations matter as much as economic data. They discussed how inflation expectations can be a self-fulfilling prophecy, and shared the key takeaways of the quarterly DBS-Sim Kee Boon Institute’s Singapore Index of Inflation Expectations (DBS-SKBI SInDEx) survey. They concluded that effective communication on inflation control measures, in addition to credible policy decisions, will help consumers feel assured and refrain from basing purchasing decisions …

The Effects Of Consumer Loan Application Formats And Advertised Terms On Consumer Borrowing Decisions, Alicia M. Johnson

Graduate Theses and Dissertations

Consumers continue to demonstrate a willingness to accrue more debt. They are also more accepting of increased repayment risk via the acceptance of longer loan terms. Extant research on consumer borrowing consists primarily of experiments designed to assess consumer choices and understand how consumers evaluate loan attributes in relation to one another within consumer borrowing contexts (Kamleitner, Hoelzl, and Kirchler 2012; Ranyard et al., 2006). Thus, prior research examines consumer responses to loan information rather than the generation of loan parameters at the time of financing. With important implications for consumers, marketers of financial products, academic researchers, and federal regulators, …

Lessons Learned: Zeti Akhtar Aziz, Maryann Haggerty

Journal of Financial Crises

Zeti Akhtar Aziz, a Malaysian economist, was governor of Bank Negara Malaysia, her nation’s central bank, from 2000 to 2016; prior to that, she was acting governor and deputy governor. Dr. Zeti was a key leader in Malaysia’s response to the Asian financial crisis of 1997¬-98, as well as the financial sector restructuring that followed. This “Lessons Learned” summary is based on a 2022 interview with Dr. Zeti. At the time of the interview, she was co-chair of the board of governors of the Asia School of Business in Kuala Lumpur, which is a partnership between Bank Negara and the …

Lessons Learned: Mark Van Der Weide, Matthew A. Lieber

Journal of Financial Crises

With more than two decades of continuing service at the Federal Reserve Board, Mark Van Der Weide brings a unique insider perspective on central bank policymaking before, during, and after the Global Financial Crisis (GFC), including the Fed’s response to the COVID-19 pandemic in 2020. From 1998 to 2009, Van Der Weide served in the Fed’s legal division. De-tailed to the Treasury Department in 2009, he helped draft the Dodd-Frank Wall Street Re-form and Consumer Protection Act of 2010. Back at the Fed in 2010, Van Der Weide served for eight years in the Division of Supervision and Regulation, where …

Lessons Learned: David Wilcox, Mercedes Cardona

Journal of Financial Crises

David Wilcox was the deputy director of the Division of Research and Statistics of the Federal Reserve Board of Governors during the Global Financial Crisis of 2007-¬09. He assisted in developing the Federal Reserve policy response that ultimately stabilized the economy by providing insight into the economic and financial outlook to the Federal Open Market Committee (FOMC) prior to each of its policy-setting meetings. Wilcox became director of the division in 2011 and served in that role through 2018, acting as the division’s chief economist, manager, and the senior adviser to three Fed chairs. After leaving the Fed, he joined …

Lessons Learned: Brooksley Born, Maryann Haggerty

Journal of Financial Crises

Brooksley Born, a lawyer with decades of experience in derivatives law, served as chair of the Commodity Futures Trading Commission (CFTC) from 1996 to 1999. At the CFTC, she advocated for federal regulation of the over-the-counter derivatives (OTC) market, but legislation failed to pass. The OTC derivatives market had a central role in the Global Financial Crisis of 2007-09. Born, who returned to private practice after her CFTC term, served as a commissioner on the US Financial Crisis Inquiry Commission, which investigated the causes of the crisis and issued its report in January 2011. This “Lessons Learned” is based on …

Lessons Learned: Michael Silva, Mercedes Cardona

Journal of Financial Crises

Michael Silva was chief of staff to then-President of the Federal Reserve Bank of New York (FRBNY) Timothy Geithner from 2006 to 2009, including the early stages of the Global Financial Crisis (GFC). As such, Silva was critical in the coordination of personnel and information during the GFC, specifically during the period when the FRBNY was addressing liquidity stresses in the bank sector, including the bailout of Bear Stearns, the failure of Lehman Brothers, and the rescue of American International Group. When Geithner became President Barack Obama’s Treasury Secretary in 2009, Silva became chief of staff to his successor at …