Commentary by faculty and affiliates of the Duke Law Global Financial Markets Center
Recent studies show that dual holders—that is, institutions that simultaneously hold equity and debt of the same firm—internalize the shareholder-creditor conflict and lead to incentive alignment between the two parties (Jiang et al., 2010; Chava et al., 2017; Chu, 2018; Anton and Lin, 2020). However, mitigation of the shareholder-creditor conflict comes at the cost of […]
Banks became major participants in U.S. securities markets twice in the past century – during the 1920s and after the mid-1990s. Both times, banks with “universal banking” powers originated risky loans and packaged them into securities that were sold to investors around the world. Both times, universal banks promoted unsustainable credit booms that led to […]
There has been growing attention among policymakers and the general public to the taxation of multinational corporations (MNCs) in recent years. This reflects widespread concern about the capacity of the international tax regime – which originated in the 1920s – to accommodate recent developments such as the growth of digital services across borders. In particular, […]
The COVID-19 pandemic and associated global economic shutdown roiled financial markets around the world during the spring of 2020. The usually placid municipal securities market was not immune from this disruption. Initially, investors flocked to municipal securities to de-risk portfolios in response to the growing pandemic, pushing prices higher and bond yields to record lows. […]
The COVID-19 pandemic has changed many aspects of the way that individuals engage with banking and payment tools, including various FinTech services. There are several reasons why the pandemic might have accelerated the adoption of FinTech and other digital platforms in payments by consumers and financial institutions. The pandemic may have led to an increase […]
The rise of FinTech is one of the most critical developments in finance over the past decade. One important FinTech development is initial coin offerings (ICOs), whereby investors can purchase blockchain-based cryptocurrencies directly from entrepreneurs. To those new to the crypto world, ICOs provide a mechanism to raise external funding through the issuance of digital […]
Since its emergence in December 2019, there have been more than 20 million COVID-19 infections worldwide, with at least five million confirmed cases in the United States (Roser et al., 2020). Individuals and business entities suffered severe loss of revenues and disrupted supply chains due to industry shutdowns and restrictions on movement and commerce. Policymakers […]
The Office of the Comptroller of the Currency (OCC) recently issued a proposed “true lender” rule.[1] The proposed rule would establish a two-part test for determining whether a national bank or federal savings association “makes a loan and is the ‘true lender’ in the context of a partnership between a bank and a third party, […]
At this time, numerous initiatives are attempting to provide citizens with a digital form of central bank money, referred to as Central Bank Digital Currency (CBDC). CBDC promises many benefits for citizens, such as providing a risk-free means of payment, preserving monetary sovereignty in light of the growing usage of private cryptocurrencies, and strengthening the […]
Earnings management is the use of accounting methods by managers to manipulate financial statements in order to inaccurately convey the financial performance of their company. Earnings management is costly to stakeholders and society because it decreases the informativeness of earnings thereby distorting the economic efficiency of the stock market. Moreover, earnings management can also potentially […]