Financial Institutions →
- 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.
- 26 Jun 2017
- Working Paper Summaries
Inventory Management for Mobile Money Agents in the Developing World
Mobile money agents in the developing world face a key inventory management challenge: How much cash and e-float should be held to minimize both stockouts and excess working capital? The authors develop two inventory models and show substantial inventory cost reduction with a large dataset of East African mobile money transactions.
- 01 Jun 2017
- Cold Call Podcast
Building India’s First $100 Billion Company
Startups welcome growth but are often strangled by it. In this podcast, Sunil Gupta discusses how entrepreneur Vijay Shekhar Sharma is meeting this challenge with his mobile payments company Paytm. Open for comment; 0 Comments.
- 08 May 2017
- Working Paper Summaries
Monetary Policy and Global Banking
Global banks commonly move funds across markets to respond to differential monetary policy changes. This paper finds that cross-currency flows affect the cost of foreign exchange hedging, ultimately affecting credit supply in different currencies. The traditional view of how global banks respond to local shocks is weakened and, for major currencies, breaks down.
- 02 May 2017
- Working Paper Summaries
The Cross Section of Bank Value
How do commercial banks create value? This paper represents the first attempt to empirically identify the primary determinants of cross-sectional variation in bank value. Among the findings: A bank's ability to produce deposits is by far the most important determinant in explaining cross-sectional variation in bank value.
- 30 Jan 2017
- Research & Ideas
Vanguard, Trian And The Problem With 'Passive' Index Funds
Index funds are the major shareholders in many large- and medium-sized public companies, but their passive investment nature offers few checks on those companies’ executives, says Luis Viceira. Open for comment; 0 Comments.
- 07 Dec 2016
- HBS Case
Why Millennials Flock to Fintech for Personal Investing
New tech-heavy financial firms are helping millennials invest, but with a twist. They are swapping out investment advisers for financial robots, and passing along the savings. Luis Viceira explains the rise of "fintech" in a new case study.
- 30 Nov 2016
- Working Paper Summaries
The Stock Market and Bank Risk-Taking
It is clear that risk-taking by financial institutions is one of the main causes of financial crises and severe recessions. Yet we know relatively little about what gives rise to such risk-taking in the first place. This paper presents evidence that a focus on short-term stock prices induces publicly-traded banks to increase risk relative to privately-held banks. The findings provide support for the view that compensation schemes should require management to hold stock for longer periods to mitigate their incentives to pump up short-term earnings and the short-term stock price.
- 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.
- 02 Aug 2016
- Working Paper Summaries
Financial Regulation in a Quantitative Model of the Modern Banking System
This study at the intersection of macroeconomics and banking explores the optimal regulation of banks. Studying and quantifying the effects of capital requirements in a model that features regulated (commercial) and unregulated (shadow) banks, the authors find that a higher capital requirement makes regulated banks safer, but does not affect the riskiness of shadow banks. The net benefit of such a policy would depend on the level of fragility of the unregulated banks.
- 15 Feb 2016
- Working Paper Summaries
Replicating Private Equity with Value Investing, Homemade Leverage, and Hold-to-Maturity Accounting
This paper studies the asset selection of private equity investors and the risk and return properties of passive portfolios with similarly selected investments in publicly traded securities. Results indicate that sophisticated institutional investors appear to significantly overpay for the portfolio management services associated with private equity investments.
- 12 Nov 2015
- Working Paper Summaries
Catering to Investors Through Product Complexity
This paper investigates the rationale for issuing complex securities to retail investors.
- 02 Oct 2015
- Working Paper Summaries
Gradualism in Monetary-Policy: A Time Consistency Problem?
Jeremy C. Stein and Adi Sunderam develop a model of monetary policy in which the observed degree of policy inertia is not optimal from an ex ante perspective, but rather reflects a fundamental time consistency problem.
- 02 Sep 2015
- Research & Ideas
Explaining China's Crash
After a decade of massive growth, China’s stock market began a precipitous summer slide that that hasn't slowed yet. Dante Roscini explains what's deflating markets worldwide. Open for comment; 0 Comments.
- 13 Aug 2012
- Research & Ideas
When Good Incentives Lead to Bad Decisions
New research by Associate Professor Shawn A. Cole, Martin Kanz, and Leora Klapper explores how various compensation incentives affect lending decisions among bank loan officers. They find that incentives have the power to change not only how we make decisions, but how we perceive reality. Closed for comment; 0 Comments.
- 06 Dec 2011
- Op-Ed
Greater Fiscal Integration Best Solution for Euro Crisis
Ministers and central bankers are working to solve the debt crisis that threatens the European integration project. Is there hope? There is reason to be optimistic, according to Harvard Business School's Dante Roscini, a former investment banker. Open for comment; 0 Comments.
- 29 Sep 2008
- Research & Ideas
Financial Crisis Caution Urged by Faculty Panel
Dean Jay O. Light and a group of Harvard Business School faculty explored the origins and possible outcomes of the U.S. financial crisis at a recent "Turmoil on the Street" panel. Closed for comment; 0 Comments.
- 23 Jun 2008
- Research & Ideas
Innovative Ways to Encourage Personal Savings
Saving money doesn't need to be so difficult. According to HBS professor Peter Tufano, "The most interesting ideas—indeed the oldest—try to make savings a fun or satisfying experience." As Tufano describes in this Q&A, different solutions appeal to different people. Here's what government policy, the private sector, and nonprofits can do. Key concepts include: A variety of levers can be used to support people who want to save (not to force someone to save who doesn't want to). Some levers are simple changes that make the process of savings easier. Other levers involve providing various incentives, be they financial or sociological. The oldest and most interesting ideas try to make savings a fun or satisfying experience. Closed for comment; 0 Comments.
The Decline of Big-Bank Lending to Small Business: Dynamic Impacts on Local Credit and Labor Markets
Between 2008 and 2014, the Top 4 banks sharply decreased their lending to small business. This paper examines the lasting economic consequences of this contraction, finding that a credit supply shock from a subset of lenders can have surprisingly long-lived effects on real activity.