Financial instability transition under heterogeneous investments and portfolio diversification
We analyze the stability of financial investment networks, where financial institutions hold overlapping portfolios of assets. We consider the effect...
India’s Unified Payments Interface (UPI) system and its transformative impact on the economy
India’s Unified Payment Interface (UPI) is an example of how an innovative payments and settlement system can initiate an economy wide transformation...
Phase transitions in debt recycling
Debt recycling is an aggressive equity extraction strategy that potentially permits faster repayment of a mortgage. While equity progressively builds...
Unintended Consequences of Holding Dollar Assets
We examine a novel mechanism whereby the US dollar’s global dominance can have a large, unexpected impact on foreign Treasury yields in crisis periods...
Correlation between upstreamness and downstreamness in random global value chains
This paper is concerned with upstreamness and downstreamness of industries and countries in global value chains. Upstreamness and downstreamness...
Upstreamness and downstreamness in input-output analysis from local and aggregate information
Ranking sectors and countries within global value chains is of paramount importance to estimate risks and forecast growth in large economies. However...
The calming of short-term market fear and its long-term consequences: The central banks’ dilemma
An Unconventional FX Tail Risk Story
We examine how the tail risk of currency returns over the past 20 years were impacted by central bank (monetary and liquidity) measures across the...
On the use of artificial intelligence in financial regulations and the impact on financial stability
As the financial authorities increase their use of artificial intelligence (AI), micro regulations, such as consumer protection and routine banking...
Let the Market Speak: Using Interest Rates to Identify the Fed Information Effect
I propose a novel method to identify the exogenous monetary shock from the signaling effect of a Fed announcements in real time. The method relies on...
Low Rates and Bank Loan Supply: Theory and Evidence from Japan
In this paper, we explore the consequences of low nominal interest rates for credit supply, macroeconomic outcomes and policy. Using the protracted...
On the Fragility of DeFi Lending
We develop a dynamic model of DeFi lending that incorporates the following key features: 1) borrowing and lending are decentralized, anonymous...
Granular Corporate Hedging Under Dominant Currency
This paper shows that, in a world dominated by vehicle currencies, firms engaging in international operations retain currency risk and hedge it real...
Latent Fragility: Conditioning Banks' Joint Probability of Default on the Financial Cycle
We propose the CoJPoD, a novel framework explicitly linking the cross-sectional and cyclical dimensions of systemic risk. In this framework, banking...
Green Capital Requirements
We study bank capital requirements as a tool to address climate-related financial risks and evaluate whether a prudential mandate for bank regulators...
Cultural Stereotypes of Multinational Banks
Using hand-collected data spanning more than a decade on European banks’ sovereign debt portfolios, we show that the trust of residents of a bank’s...
