Systemic Banking Crises: A New Database

This paper presents a new database on the timing of systemic banking crises and policy responses to resolve them. The database covers the universe of systemic banking crises for the period 1970-2007, with detailed data on crisis containment and resolution policies for 42 crisis episodes, and also includes data on the timing of currency crises and sovereign debt crises. The database extends and builds on … [ Read more ]

To Guide or Not to Guide

An investigation shows that investors suffer when firms stop giving quarterly earnings guidance.

Private Banks as Corporate Shareholders: Lessons from History

In the U.S. in 1906, the prominent private bank Kuhn Loeb – prompted by the scandal of the Armstrong Investigation – withdrew from the boards of all non-bank corporations. This historical announcement changed the course of corporate governance, and ultimately prevented private banks from being activist shareholders in the United States. In the paper “The Value of Private Banks in Corporate Governance: Evidence From the … [ Read more ]

The Triumph of 1914

A new book argues that the origins of American financial dominance can be traced to a bold decision to close the New York Stock Exchange for more than four months.

How to Fix China’s Banking System

Old bad debt hasn’t been fully resolved. New bad debt is piling up. Yet the problems can be cleared up without a systemic crisis.

A Guide to the ATM and Debit Card Industry

The U.S. payments system is going through a period of rapid change. Paper checks are increasingly giving way to electronic forms of payment, which themselves are being transformed as new products, new players, and new industry structures arise. Some of the most dramatic changes are being seen in the automated teller machine (ATM) and debit card industry. This paper provides a much-needed overview of the … [ Read more ]

Why Harvard Is Bad for Wall Street

The bright young things from Harvard Business School are making their way to Wall Street in droves. Some 26 percent of the HBS class of 2004 took stock-market related jobs, up from 23 percent of the class of 2003. I guess that means it’s time to sell.

Banking on International Financial Stability

In their search for the root causes of international financial meltdowns, politicians and bureaucrats have been looking in the wrong places. The best defense against economic crises is good, solid banks.

Private Equity’s New Challenge

A changed competitive landscape calls for a different business model.

Banks Shift Gears in Drive for Top-Line Growth: Focus Turns to Customers in the Financial Services Industry

The battle of the banks is taking on new urgency. After spending the past few years fiddling with their cost structures, leading banking organizations around the world are shifting their efforts toward growth-with an eye toward creating value.

Yet while their growth expectations are high, the markets are not cooperating. Low GDP (gross domestic product) and inflation rates in almost every market mean tepid-to-moderate growth … [ Read more ]

The Role of Central Banks in Fostering Efficiency and Stability in the Global Financial System

Fed Vice Chairman Roger W. Ferguson stressed the important role Central banks play in the global financial system and also provided a great look at the changing landscape of commercial banking. This one would make a great introduction or conclusion to a Money and Banking course! [ Annotation]

The Capital Asset Pricing Model: Theory and Evidence

I love summary articles. They help make sense of the world and let us see the forest through the trees. Some of my favorites include the Harris and Raviv summary article on capital structure, Fama’s paper that responds to Behavioral Finance Theories, and Cliff Smith’s introduction to his book of readings in Corporate Finance. And now I have a favorite on the … [ Read more ]

The Information Content of Share Repurchase Programs

Contrary to the implications of many payout theories, we find that announcements of openmarket share repurchase programs are not followed by an increase in operating performance. However, we find that repurchasing firms experience a significant reduction in systematic risk and cost of capital relative to non-repurchasing firms. Further, consistent with the free cash-flow hypothesis, we find that the market reaction to share repurchase announcements is … [ Read more ]

Luxury Goods and the Equity Premium

What a great article The equity risk premium has puzzled researchers for years. In a nutshell it is the finding that the equity risk premium demanded by investors is too large to be explained by changes in stock returns or changes in consumption unless very high levels of risk aversion were assumed. (See Grossman-Schiller, 1981, Mehra-Prescott 1985). In a forthcoming JF article, … [ Read more ]

What Drives Companies to Repurchase Their Stock?

In the late 1990s, the use of employee stock options increased dramatically, as did the use of stock repurchases. Both affect a company’s earnings per share. New research goes beyond the anecdotes to determine whether financial reporting incentives affect corporate managers’ decisions to repurchase their company’s stock.

Deflecting Check Fraud

Despite increased security and new technologies that combat bad checks, companies are getting hammered with losses.

Basel’s New Balance

A new accord may soon help banks lend more for less.

How Foreign Firms Can Attract U.S. Investors: Overcoming ‘Home Bias’

Wharton accounting professor Brian Bushee remembers talking to the CFO of a large Australian consumer products company that was having trouble attracting interest from U.S. analysts and institutional investors. Part of the problem, the CFO had decided, was that his company chose to comply with Australian accounting methods rather than with U.S. GAAP (Generally Accepted Accounting Principles). His experience led Bushee and two colleagues to … [ Read more ]

Rewriting the Letter of Credit

Online commerce cries out for a new take on an old economy tool. Letters of credit are being transformed into digital documents stored on Web sites, and new electronic alternatives are preserving the benefits of L/Cs in a form that is simpler and paperless.

Does Decimalization Harm or Help Institutional Investors?

“Decimalization” – the pricing of stocks in dollars and cents instead of fractions – lauded by proponents to be a good thing for investors when it was adopted by the U.S. stock markets in early 2001, is under fire. Critics say it costs institutional investors big. But in a study co-authored by Venkatesh Panchapagesan, assistant professor of finance at Olin, direct institutional trading costs appear … [ Read more ]