Found 490 article(s) in category 'Financial Services'

US economy is in great shape, but very fragile

US economy is in great shape, but very fragile. Martin Feldstein, January 19, 2018, Video, “In a sea of bulls, one bear has emerged: Harvard University professor Martin Feldstein said on Friday that rising interest rates could send stocks into a downward spiral.  In March, the Federal Reserve is expected to announce its policy rate hike outlook for 2018. In September, Fed officials predicted it would raise rates three times in 2018 and twice more in 2019.” Link

 

Tags: , , , ,

Can Index Funds Be a Force for Sustainable Capitalism?

Can Index Funds Be a Force for Sustainable Capitalism? George Serafeim, December 7, 2017, Opinion, “The investment industry is changing. Among other things, there is growing demand from both retail and institutional investors to align their capital with better environmental and social outcomes, and more resources going into index fund or quasi-indexing products. These two trends may seem separate—or, some people believe, incompatible—but together I believe they have the power to improve finance’s role in the world. Index funds can be a force for sustainable capitalism.Link

Tags: , , , , , , ,

Borrowing to Save? The Impact of Automatic Enrollment on Debt

Borrowing to Save? The Impact of Automatic Enrollment on Debt. John Beshears, David Laibson, Brigitte Madrian, December 6, 2017, Paper, “How much of the retirement savings induced by automatic enrollment is offset by increased borrowing outside the retirement savings plan? We study a natural experiment created when the U.S. Army began automatically enrolling its newly hired civilian employees into the Thrift Savings Plan (TSP) at a default contribution rate of 3% of income. Four years after hire, automatic enrollment causes no significant change in debt excluding auto loans and first mortgages (point estimate = 0.9% of income, 95% confidence interval = [-0.9%, 2.7%]). Automatic enrollment does significantly increase auto loan balances by 2.0% of income and first mortgage balances by 7.4% of income.Link

Tags: , , , , , ,

Containing Systemic Risk by Taxing Banks Properly

Containing Systemic Risk by Taxing Banks Properly. Mark Roe, November 20, 2017, Paper, “At the root of recurring bank crises are deeply-implanted incentives for banks and their executives to take systemically excessive risk. Since the 2008–2009 financial crisis, regulators have sought to strengthen the financial system by requiring more capital (which can absorb losses from risk-taking) and less risk-taking, principally via command-and-control rules. Yet bankers’ baseline incentives for system-degrading risk-taking remain intact.Link

Tags: , , , , , , ,

Does Financial Misconduct Affect the Future Compensation of Alumni Managers?

Does Financial Misconduct Affect the Future Compensation of Alumni Managers? Boris Groysberg, George Serafeim, November 15, 2017, Paper, “We explore how an organization’s financial misconduct may affect pay for former employees not implicated in wrongdoing. Drawing on stigma theory we hypothesize that although such alumni did not participate in the financial misconduct and they had left the organization years before the misconduct, they experience a compensation penalty. Our results support this prediction. The stigma effect increases in relation to the job function proximity to the misconduct, recency of the misconduct, and an employee’s seniority. Collectively, our results suggest that the stigma of financial misconduct could reach alumni employees and need not be confined to executives and directors that oversaw the organization during the misconduct.” Link

Tags: , , , , , , ,

Capital Flow Cycles: A Long, Global View

Capital Flow Cycles: A Long, Global View. Carmen Reinhart, October 31, 2017, Paper, “This paper develops a new, extensive database on international capital flows over the past 200 years by combining long-run data on international debt issuance, the current account, and central bank reserves across countries. We show that crossborder financial flows from financial centers to the periphery are cyclical, with similar patterns over time. We document the interaction between the capital flow cycle, the commodity price super-cycle, and short-term interest rates.Link

Tags: , , , , ,

Mortgage-Default Research and the Recent Foreclosure Crisis

Mortgage-Default Research and the Recent Foreclosure Crisis. Christopher Foote, October 2017, Paper, “This paper reviews recent research on mortgage default, focusing on the relationship of this research to the recent foreclosure crisis. Research on defaults was advanced both theoretically and empirically by the time the crisis began, but economists have moved the frontier further by improving data sources, building dynamic optimizing models of default, and explicitly addressing reverse causality between rising foreclosures and falling house prices. Mortgage defaults were also a key component of early research that pointed to subprime and other privately securitized mortgages as fundamental drivers of the housing boom, although this research has been criticized recently. Going forward, improvements to data and models will allow researchers to explore the central unsolved question in this area: why mortgage default is so rare, even for households with high levels of negative equity or financial distress.Link

Tags: , , , , , ,