Research highlight
High-frequency trading in the stock market and the costs of options market making
Journal of Financial Economics, 159, 103900
The Law of Small Numbers in Financial Markets: Theory and Evidence
We build a model of the law of small numbers (LSN)—the incorrect belief that even small samples represent the properties of the underlying population...
What Drives Repo Haircuts? Evidence from the UK Market
Using a unique transaction-level dataset covering the UK bilateral repo market, we show that only 61% of the repos are backed by high-quality...
Subtle Discrimination
We introduce the concept of subtle discrimination - biased acts that cannot be objectively ascertained as discriminatory - and study its implications...
The Inference-Forecast Gap in Belief Updating
Evidence from experiments, surveys, and the field has uncovered both underreaction and overreaction to new information. We provide new experimental...
Why so many crises happen when we know why they happen and how to prevent them
Financial crises are not complicated, and many claim to know why they happen and how to prevent them. Why then do they happen with such alarming...
Reducing bureaucratic hassle in Ukraine
A reform removing the need for businesses to use a company seal when dealing with government agencies means ‘signed, sealed and delivered’ has become...
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...
The continuing financial fragility of banks
Banks remain fragile, which could be reduced if they held more equity and less debt. Bankers, however, fear this could affect their compensation...
Research highlight
A Theory of Socially Responsible Investment
The Review of Economic Studies, 92(2), 1193–1225
The Systemic Governance Influence of Expectation Documents: Evidence from a Universal Owner
The Review of Corporate Finance Studies, 14 (2), 372–407
How a regulated utility innovates without breaking things
Safety and stability are essential for public utilities. But they face pressure to innovate to keep up with technological innovation, environmental...
Scale or Yield? A Present-Value Identity
We propose a loglinear present-value identity in which investment ("scale"), profitability ("yield"), and discount rates determine a firm’s market-to...
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...
