Found 516 article(s) in category 'Financial Services'

Looking for Alternatives: Pension Investments around the World, 2008 to 2017

Looking for Alternatives: Pension Investments around the World, 2008 to 2017. Victoria Ivashina, Josh Lerner, August 24, 2018, Paper, “Using hitherto-unexplored data, this paper provides a first look into pension funds’ allocations to alternative asset classes around the world. On average, in the ten years following the financial crisis, allocations to private equity and real estate nearly doubled, representing about 20% of assets under management in 2017 for pensions in many of the largest economies. Our sample indicates a $1.8 trillion shift to alternatives between 2008 and 2017. This phenomenon equally affected public and private pension funds, as well as funds of all sizes. This shift does not appear to be a consequence of mechanical factors such as increase in drawn capital or expected returns, but rather reflects a proactive portfolio allocation response to perceived investment opportunities. The extent of the shift to Alts is more pronounced for nations with lower long-term interest rate environment.Link

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The Fed Should Raise Rates, but Not the Ones You’re Thinking

The Fed Should Raise Rates, but Not the Ones You’re Thinking. Jason Furman, August 20, 2018, Opinion, “The Federal Reserve has kept rates too low for too long. I’m not referring to interest rates. It’s high time for the Fed to raise countercyclical capital-buffer rates, which govern the amount of extra equity and cash banks are supposed to hold in good times. Increasing the capital buffer would reduce the risk of financial instability, set a precedent for sound macroeconomic management, and build up a bigger cushion for the next downturn.Link

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Six Months Isn’t ‘Long Term’

Six Months Isn’t ‘Long Term’. Robert Pozen, Mark Roe, August 20, 2018, Opinion, “President Trump tweeted on Friday that he had directed the Securities and Exchange Commission to study a suggestion from a business leader, later revealed as outgoing Pepsi CEO Indra Nooyi: “Stop quarterly reporting & go to a six month system.” The popular…Link

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An Experimental Test of the Association Between Network Centrality and Cross-Village Risk-Sharing Links

An Experimental Test of the Association Between Network Centrality and Cross-Village Risk-Sharing Links. Rohini Pande, August 14, 2018, Paper, “We test a prediction from a recent paper by Ambrus and Elliott (2018), according to which less volatile incomes increases the association between within community centrality of a household, defined as Myerson centrality, and the probability of keeping financial connections with households outside the village. We use data from a unique field experiment in 185 Indian villages in which a randomly chosen half of the villages got access to formal banking services. We find empirical support for the prediction, as the relationship between Myerson centrality and having outside links is significantly more positive in villages that got access to formal banking.Link 

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How to Increase America’s Saving Rate

How to Increase America’s Saving Rate. Martin Feldstein, July 26, 2018, Opinion, “Once upon a time, US policymakers believed that more consumer spending was better than higher saving. But even though officials have come to realize that a high level of saving means more investment and faster growth, legislation to encourage more personal saving has failed to reverse a sharply downward trend.Link

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As Congress Rolls Back Banking Regulations, One Historian Urges Caution

As Congress Rolls Back Banking Regulations, One Historian Urges Caution. Nancy Koehn, May 29, 2018, Audio, “This month, Congress approved changes to the 2010 Dodd-Frank Act, a series of banking reforms passed in the wake of the 2008 financial crisis to stabilize the nation’s economy.  The rollback is limited, applying only to midsize and regional banks. Restrictions on the country’s largest banks are still in place. However, Harvard Business School historian Nancy Koehn cautioned against deregulating the industries responsible for the 2008 crisis too quickly.Link

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Andrei Shleifer at the Ratio Institute

Andrei Shleifer at the Ratio Institute. Andrei Shleifer, May 28, 2018, Video, “Andrei Shleifer is a Professor of Economics at Harvard University. On May 28th he gave a lecture in memory of Eli F. Heckscher at Stockholm School of Economics by invitation from EHFF and the Ratio Institute. In this Ratio dialogue with Ratio CEO Nils Karlson he discusses the Heckscher lecture 2018: ‘A Crisis of Beliefs: Investor Psychology and Financial Fragility’Link

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Do Founders Control Start-Up Firms that Go Public?

Do Founders Control Start-Up Firms that Go Public? Jesse Fried, May 2018, Paper, “Startup founders, who generally must cede control to obtain VC financing, are widely believed to regain control in the event of an IPO, à la Facebook’s Mark Zuckerberg. Indeed, the premise that founders expect to be able to reacquire control if there is an IPO underlies the leading finance theory for why venture capital cannot thrive without a robust stock market. But little is known about how frequently founders regain control via IPO. Using a sample of over 18,000 VCbacked firms, we show that founders generally do not reacquire control via IPO. In almost 60% of firms that go public, the founder is no longer CEO at IPO.Link

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Pension Policy and the Financial System

Pension Policy and the Financial System. David Scharfstein, May 2018, Paper, “This paper examines the effect of pension policy on the structure of financial systems around the world. In particular, I explore the hypothesis that policies that promote pension savings also promote the development of capital markets. I present a model that endogenizes the extent to which savings are intermediated through banks or capital markets, and derive implications for corporate finance, household finance, banking, and the size of the financial sector. I then present a number of facts that are broadly consistent with the theory and examine a variety of alternative explanations of my findings.Link

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Trade Invoicing, Bank Funding, and Central Bank Reserve Holdings

Trade Invoicing, Bank Funding, and Central Bank Reserve Holdings. Gita Gopinath, Jeremy Stein, May 2018, Paper, “We develop a model that shows how the currency denomination of a country’s imports influences the funding structure of its banking system, and in turn, the currency composition of its central bank’s reserve holdings. The link between the dollar’s role in bank funding and its role as a central bank reserve currency is stronger when the country’s fiscal capacity is limited, and when exchange rates are volatile. In the data, there is a pronounced cross-country relationship between the fraction of imports that are dollar invoiced, and the fraction of central-bank foreign-exchange reserves that are held in dollars.Link

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