Refinancing Inequality during the COVID 19 Pandemic

Mortgage refinancing is one of the main channels through which monetary policy affects the pocketbooks of everyday Americans. When interest rates are sufficiently low, homeowners can refinance their loans, reducing their monthly payment and realizing a substantial reduction in borrowing costs over the life of the loan. The logic behind expansionary monetary policy in this context […]

Financial Regulatory Suspensions and Debt Provision during the Covid-19 crisis

Policymakers and regulators have launched financial relief and rescue programs to promote economic recovery and alleviate household suffering during the COVID-19 pandemic. In doing so, prudential regulation for banks has been adjusted and it remains uncertain if such suspensions are temporary or entail longer-term effects. In our paper ‘Debt Expansion as “Relief and Rescue” at the Time of […]

Unsecured to the Satisfaction

When engaging in 13(3) lending, the Federal Reserve must be “secured to [its] satisfaction,” which it has generally (and reasonably) taken to mean that its ex ante expectation should be that it will be fully repaid.i However, the Fed also interprets the legislative history of 13(3) as suggesting that this standard cannot be met with an entirely unsecured loan—a loan in which the Fed takes no collateral, third-party guarantee, or […]

Does sustainable investing deprive unsustainable firms of fresh capital?

As evidenced by the strong growth in asset managers and owners subscribing to the Principles for Responsible Investment, a global initiative that aims to create a more sustainable global financial system, investors increasingly care not only about their financial performance, but also about the sustainability characteristics of their investments. Investors also increasingly work to align their […]

Aligning the Financial System and Capital Markets with Long-Term Economic and Public Interest Outcomes

The following post is the author’s combined oral and written testimony presented to the U.S. House Committee on Financial Service’s Subcommittee on Investor Protection, Entrepreneurship and Capital Markets for a hearing entitled, “Climate Change and Social Responsibility: Helping Corporate Boards and Investors Make Decisions for a Sustainable World” on Thursday, February 25, 2021. A video […]

A Closer Look at Today’s U.S. Treasury Security Market

Since the introduction of Treasury Inflation Protected Securities (TIPS) in 1997, financial experts have used the quoted yield to maturity on these instruments to determine a “market-driven measure” of expected inflation. In particular, financial analysts have taken the quoted yield to maturity on a given conventional U.S. Treasury security and subtracted the quoted yield to […]

Current State of Research on Factor Investing in Government Bonds

Factor investing has grown in popularity over the last few decades, especially with respect to equity markets. After extending Fama-French factors to corporate bond markets, recent research has more often concentrated on the government bond space and revealed that there is indeed clear empirical evidence for the existence of significant government bond factors. Voices that […]

Partisanship in Loan Pricing

Recent years have seen a heightened level of partisan conflict in the U.S.[1] Both academic research and anecdotal evidence suggest that partisanship generates profound influence on individuals’ beliefs, leading them to selectively incorporate information that is favorable to their own political orientation.[2] In particular, partisanship appears to play a role in influencing individuals’ perceptions of […]

Intangibles to Tangible: In Search of Firm Value Creation

Intangible assets have become key factors in economics and have received much attention of late. Recent studies focus on the single aspect of intangible-related information, whereas aggregate proxies of intangible assets are scarce. In this post, we introduce our recent working paper in which we construct a comprehensive intangible assets-related measure, I-SCORE, and study the […]

Public Debt and Household Lending

For a large number of European economies, real estate accounts for more than 70% of wealth, whereas financial assets usually account for below 20%.  From a macroeconomic perspective, the large exposure to the real estate market represents both a vulnerability and a source of resilience: on the one hand, it exposes a large share of […]