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New research on financial institutions from Harvard Business School faculty on issues including banks and banking, trust companies, insurance companies, and investment dealers.
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How Can Financial Advisors Thrive in Shifting Markets? Diversify, Diversify, Diversify

by Ben Rand

Financial planners must find new ways to market to tech-savvy millennials and gen Z investors or risk irrelevancy. Research by Marco Di Maggio probes the generational challenges that advisory firms face as baby boomers retire. What will it take to compete in a fintech and crypto world?

Equity Bank CEO James Mwangi: Transforming Lives with Access to Credit

Re: Caroline M. Elkins

James Mwangi, CEO of Equity Bank, has transformed lives and livelihoods throughout East and Central Africa by giving impoverished people access to banking accounts and micro loans. He’s been so successful that in 2020 Forbes coined the term “the Mwangi Model.” But can we really have both purpose and profit in a firm? Harvard Business School professor Caroline Elkins, who has spent decades studying Africa, explores how this model has become one that business leaders are seeking to replicate throughout the world in her case, “A Marshall Plan for Africa': James Mwangi and Equity Group Holdings.” As part of a new first-year MBA course at Harvard Business School, this case examines the central question: what is the social purpose of the firm?

What Happens When Banks Ditch Coal: The Impact Is 'More Than Anyone Thought'

by Barbara DeLollis

Bank divestment policies that target coal reduced carbon dioxide emissions, says research by Boris Vallée and Daniel Green. Could the finance industry do even more to confront climate change?

The Best Person to Lead Your Company Doesn't Work There—Yet

by Rachel Layne

Recruiting new executive talent to revive portfolio companies has helped private equity funds outperform major stock indexes, says research by Paul Gompers. Why don't more public companies go beyond their senior executives when looking for top leaders?

What Does the Failure of Silicon Valley Bank Say About the State of Finance?

by Dina Gerdeman

Silicon Valley Bank wasn't ready for the Fed's interest rate hikes, but that's only part of the story. Victoria Ivashina and Erik Stafford probe the complex factors that led to the second-biggest bank failure ever.

Are Banks the ‘Bad Guys’? Overdraft Fees Are Crushing Low-Income Customers

by Rachel Layne

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.

Why JPMorgan Chase Is Committed to Improving Racial Equity in Banking

Re: Joseph L. Bower

In 2020, JPMorgan Chase & Co. announced a $30 billion, “Commitment to Advance Racial Equity.” This included investments in housing, small businesses, and financial literacy across the U.S., as well as in diversity, equity, and inclusion initiatives within the bank. Harvard Business School Professor Emeritus Joe Bower and case protagonist Alice Rodriguez, head of community impact at JPMorgan Chase, discuss the implementation of that commitment and how it aligns with the bank’s longer-term growth strategy in the case, "JPMorgan Chase’s Path Forward." Open for comment; 0 Comments.

In the Red: Overdrafts, Payday Lending, and the Underbanked

by Marco Di Maggio, Angela Ma, and Emily Williams

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.

Bankruptcy and the COVID-19 Crisis

by Jialan Wang, Jeyul Yang, Benjamin Iverson, and Ray Kluender

Analyzing the impact of the COVID-19 crisis on bankruptcy filing rates in the United States, this study finds that large businesses, small businesses, and consumers experience very different effects of the crisis.

Why Investors Often Lose When They Sue Their Financial Adviser

by Danielle Kost

Forty percent of American investors rely on financial advisers, but the COVID-19 market rollercoaster may have highlighted a weakness when disputes arise. The system favors the financial industry, says Mark Egan. Open for comment; 0 Comments.

Making Economics More Useful: How Technological Eclecticism Could Help

by Amar Bhidé

This paper shows how tools, such as simulations used to design new technologies, can facilitate collaborative economic policy judgments. The paper forms part of a broader, ongoing study of knowledge in practical fields such as engineering, medicine, and business.

Loan Types and the Bank Lending Channel

by Victoria Ivashina, Luc Laeven, and Enrique Moral-Benito

Practitioners commonly refer to four distinct loan types: asset-based loans, cash flow loans, trade financing, and leasing. It is important to account for these differences in loan type in order to analyze the economic significance of credit market disruptions.

Coronavirus Could Create a 'Bankruptcy Pandemic'

by Dina Gerdeman

An expected explosion in bankruptcy proceedings over the coming months could overwhelm the courts, says Stuart Gilson. Open for comment; 0 Comments.

The Economic Effects of Private Equity Buyouts

by Steven J. Davis, John Haltiwanger, Kyle Handley, Ben Lipsius, Josh Lerner, and Javier Miranda

Private equity buyouts are a major financial enterprise that critics see as dominated by rent-seeking activities with little in the way of societal benefits. This study of 6,000 US buyouts between 1980 and 2013 finds that the real side effects of buyouts on target firms and their workers vary greatly by deal type and market conditions.

Bank Boards: What Has Changed Since the Financial Crisis?

by Shiva Rajgopal, Suraj Srinivasan, and Forester Wong

Since the 2008 financial crisis, bank boards have not improved their cultural or gender diversity compared to other companies, nor are they better qualified than before the crisis. Outside directorships of bank directors and the extent of CEOs also being Chairman also remains the same. However, there is some evidence of better risk oversight both from managers and the board.

Fintech's Game-Changing Opportunities for Small Business

by Martha Lagace

In the new book Fintech, Small Business, & the American Dream, Karen Mills describes how technology is opening up new capital for entrepreneurs. Around the corner: The transformative benefits of AI and big data. Open for comment; 0 Comments.

The Creation and Evolution of Entrepreneurial Public Markets

by Shai Bernstein, Abhishek Dev, and Josh Lerner

Since 1990, new stock exchanges geared toward fast-growing, entrepreneurial companies have proliferated around the world. This analysis shows that exchanges in countries with better shareholder protection allowed younger and less profitable companies to raise more capital. These markets alone cannot boost entrepreneurial activity but need enabling institutions.

Using Fintech to Disrupt Eastern Bank from Within

Re: Karen Mills

When Eastern Bank decided to battle a threat from new competitors, it hired a fintech executive to set up Eastern Labs and start innovating. Karen Mills discusses her case study on what happened next. Open for comment; 0 Comments.

Do Fire Sales Create Externalities?

by Sergey Chernenko and Adi Sunderam

This paper contributes to our understanding of the role of large institutional investors in securities markets, providing evidence that the structure of the mutual fund industry increases the risks of costly "fire sales."

IQ from IP: Simplifying Search in Portfolio Choice

by Huaizhi Chen, Lauren Cohen, Umit Gurun, Dong Lou, and Christopher J. Malloy

Mutual fund managers solve their complex “search problem” for superior investable returns by tracking—and trading—on very particular sets of firms and insiders. These sets are chosen strategically and remain very persistent over time, as does the outperformance these insiders’ trades afford to the given fund managers.