- 18 May 2022
- Research & Ideas
Are Banks the ‘Bad Guys’? Overdraft Fees Are Crushing Low-Income Customers
Payday lenders have been accused of exploiting poor consumers, but traditional banks exact a similar toll through overdraft fees. Research by Marco Di Maggio and Emily Williams shows how seemingly innocuous checking accounts can become vehicles for financial distress.
- 08 Feb 2021
- Working Paper Summaries
In the Red: Overdrafts, Payday Lending, and the Underbanked
Low-income customers turn to payday lenders and check cashers for basic financial needs when traditional banks push them out of the system through high overdraft fees and other penalties. Reducing overdraft fees improves consumers’ overall financial health and access to cheaper credit.
- 25 Oct 2020
- Research & Ideas
The Dark Side of Fintech Borrowing
Fintechs have revolutionized the banking industry, but some customers end up worse for the experience, according to research by Marco Di Maggio and colleagues. Open for comment; 0 Comments.
- 31 Aug 2020
- Working Paper Summaries
The Pass-Through of Uncertainty Shocks to Households
A firm’s stock price volatility during times of uncertainty can significantly reduce workers’ consumption and savings decisions. This paper sheds light on the economic effects of uncertainty, and in particular, how firms provide insurance to their workers during periods of turmoil.
- 05 Sep 2019
- Working Paper Summaries
The Value of Intermediation in the Stock Market
Despite the rise of alternative trading platforms, high-touch broker trading remains prominent in institutional equity markets. The authors analyze how fees, research, quality of execution, and information can help explain how execution decisions and preferences vary across investors.
- 22 May 2019
- Research & Ideas
Forgiving Student Loan Debt Leads to Better Jobs, Stronger Consumers
Without the burden of student loan debt, people seek higher-paying careers, stabilize their finances, and contribute to the economy, says Marco Di Maggio. Open for comment; 0 Comments.
- 20 Feb 2018
- Working Paper Summaries
Stock Market Returns and Consumption
Using a unique dataset for the entire Swedish population, this study of household consumption in response to changes in capital gains and dividends shows that the marginal propensity to consume (MPC) out of capital gains for households in the top 50 percent of financial wealth distribution is relatively uniform and around 5 percent but is more than 10 percent for the bottom 50 percent. These results explain why the recent stock market rally ignited a spending splurge that is cutting into how much households save for rainy days.
- 11 Jan 2018
- Working Paper Summaries
Brokers and Order Flow Leakage: Evidence from Fire Sales
This study finds that brokers tend to reveal the occurrence of a fire sale to their best clients, allowing them to generate significant profits by predating on the liquidating fund. Such information leakage comes at the expense of higher price impact, and leads to a more costly liquidation for the fire sale originator.
- 17 Jul 2017
- Working Paper Summaries
The Relevance of Broker Networks for Information Diffusion in the Stock Market
How information is generated by market participants, shared, and incorporated into prices is one of the key questions for understanding how financial markets operate. This study finds that intermediaries play a large role in the acquisition and dissemination of private information, which they extract from order flow and, more generally, from interaction with clients.
- 05 Jul 2017
- Research & Ideas
Are Stockbrokers Illegally Leaking Confidential Information to Favored Clients?
New research by Marco Di Maggio reveals stockbroker behavior that is probably illegal, definitely underregulated, and arguably influential in the day-to-day operations of the stock market. Open for comment; 0 Comments.
- 31 Oct 2016
- Research & Ideas
Quantitative Easing Didn’t Ease the Housing Crisis for the Neediest
A new study by Marco Di Maggio and colleagues takes a deep dive into the efficacy of the Fed’s quantitative easing strategy to understand how the various rounds of QE affected “the real economy.” Open for comment; 0 Comments.
- 08 Aug 2016
- Working Paper Summaries
The Unintended Consequences of the Zero Lower Bound Policy
In the aftermath of the financial crisis of 2007-2008, the United States Federal Reserve took an unprecedented decision to lower short-term nominal interest rates to zero, a policy commonly known as zero lower bound policy. This study shows that the policy adversely affected an important part of the shadow banking system, money market funds, whose returns are linked to the Fed funds rate. During times of unusually low interest rates, fund managers tended to increase their portfolios’ risk. The policy also triggered a reduction in capital supply to financial firms and large corporations and increased the financial markets’ exposure to costly runs and defaults.
Buy Now, Pay Later: How Retail's Hot Feature Hurts Low-Income Shoppers
More consumers may opt to "buy now, pay later" this holiday season, but what happens if they can't make that last payment? Research by Marco Di Maggio and Emily Williams highlights the risks of these financing services, especially for lower-income shoppers.