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Full-Text Articles in Law
Keynote Address: The Case For A Market Liquidity Provider Of Last Resort, Steven L. Schwarcz
Keynote Address: The Case For A Market Liquidity Provider Of Last Resort, Steven L. Schwarcz
Faculty Scholarship
This short paper, prepared as a keynote address, explains why the credit crunch is fundamentally a story about financial markets, not banks. Its cause was a collapse of securitization and other debt markets, which have become major sources of financing for consumers and companies. Deprived of this financing, consumers have had difficulty purchasing homes and automobiles, and companies have had difficulty purchasing inventory and making capital investments, causing the real economy to shrink. This paper examines how these financial markets should be protected. Although already subject to many prescriptive regulatory protections, these markets evolve faster than regulation can adapt. The …
Deleveraging Microfinance: Principles For Managing Voluntary Debt Workouts Of Microfinance Institutions, Deborah Burand
Deleveraging Microfinance: Principles For Managing Voluntary Debt Workouts Of Microfinance Institutions, Deborah Burand
Articles
This paper focuses on the challenges of responding to a deleveraging of the microfinance sector and offers guidelines for stakeholders in microfinance-regulators, policymakers, investors (debt and equity), donors, and microfinance providers-for how to address these challenges in the context of a microfinance institution debt workout so as to minimize undue disruption and damage to the microfinance sector as a whole.
Credit Rating Agencies, Structured Securities, And The Way Out Of The Abyss, Lois R. Lupica
Credit Rating Agencies, Structured Securities, And The Way Out Of The Abyss, Lois R. Lupica
Faculty Publications
The article examines the role of credit rating agencies (CRAs) in the evolving financial markets, and particularly in connection with the structured finance markets. The movement away from relationship-based lending based on trust, to the less personal capital markets, makes an objective assessment of creditworthiness essential to the structure of legitimate transactions, as well as to the credibility of investor decision-making. Yet, the financial crisis of 2008-2009 revealed that the CRAs seriously underestimated the risk of many complex securities that they rated. As CRAs have devoted a greater share of their resources to develop methods of rating these progressively more …
Deterring "Double-Play" Manipulation In Financial Crisis: Increasing Transaction Cost As A Regulatory Tool, Lin (Lynn) Bai, Rujing Meng
Deterring "Double-Play" Manipulation In Financial Crisis: Increasing Transaction Cost As A Regulatory Tool, Lin (Lynn) Bai, Rujing Meng
Faculty Articles and Other Publications
The sub-prime mortgage crisis that originated in the United States has triggered a global credit crunch, threatening the solvency of emerging markets that have relied heavily on foreign debt, and resulting in the devaluation of their currencies. Currency market interventions by the central banks in countries with a currency board system lead to higher short-term interest rates and further declinations in the local stock market. This economic setting invites the double-play manipulation strategy that simultaneously attacks both the local currency and the stock market. History has shown that a central bank’s stock market intervention is costly and that sustaining the …