Economic crises are an agonizing feature of modern economies leading to dramatic falls in the real GDP per capita. A crisis can exhaust country's resources forcing it to either apply for an IMF program or to default on its foreign or domestic liabilities. Do these drastic measures aid countries...

We document changes in borrowers' sensitivity to negative equity and show heightened borrower default propensity as a fundamental driver of crisis period mortgage defaults. Estimates of a time-varying coefficient competing risk hazard model reveal a marked run-up in the default option beta from...

This paper studies the consequences of regulating executive compensation at financial institutions by examining the introduction of the UK Remuneration Code, which aimed to change the decision-making horizon and risk-taking incentives of bank executives. We find that, in line with the intent of...

How much capital should financial intermediaries hold? We propose a general equilibrium model with a financial sector that makes risky long-term loans to firms, funded by deposits from savers. Government guarantees create a role for bank capital regulation. The model captures the sharp and...

How did the Great Recession affect the college degree field choices? Utilizing the geographic variation in the severity of the recession in the US, I answer this question using the differences-in-differences and synthetic controls approaches. I find that the Great Recession affected...

Repo pricing is characterized with its puzzling dual pricing measures: repo haircut and repo spread. This article develops a repo haircut model by designing haircuts to achieve high credit criteria, and identifies economic capital for repo's default risk as the main driver of repo pricing. A...

This paper investigates whether market power affects trade credit decisions. We explore several financial crises in Argentina, Brazil, Mexico and the US that work as exogenous shocks to the supply of short and long term financing for nonfinancial firms. We find that firms with high market power...

We study insolvency cascades in an interbank system when banks are allowed to insure their loans with credit default swaps (CDS) sold by other banks. We show that, by properly shifting financial exposures from one institution to another, a CDS market can be designed to rewire the network of...