Deregulation affects incumbent firms through entry threats (a curse) and entry opportunities (ablessing). To separate these effects, we construct novel network-based measures of U.S. state-level bank deregulation intensity that allow us to isolate the blessing- and curse-related effects of...

We establish existence and uniqueness of equilibrium in a generalized one-period Kyle (1985) model where insider trading can be subject to a penalty cost that is non-decreasing in the trade size.The result is obtained for uniform noise and holds for general penalty functions. Uniqueness is among...

We study how markets help spread knowledge about solutions to the standard but computationally hard problem of maximizing value over indivisible goods subject to a budget constraint. In a first experiment, we f ind that complete markets are fairly ineffective. Still, participants use prices and...

Exploiting information contained in the term-structure of sovereign credit spreads, we estimate time-varying fiscal limits – defined as the maximum outstanding debt that can credibly be covered by future primary budget surpluses. Our approach is based on a novel sovereign credit risk model...

We document that the dividend yield can predict future inflation across advanced economies. The inflation predictability reinforces the return predictability and reduces the dividend growth predictability. For example, dividend yields forecast nominal returns (but not nominal dividend growth),...

We propose a novel procedure to identify the marginal stock market investor's beliefs from observed asset prices. Our approach recovers price-consistent beliefs, i.e. the distribution of macro and financial variables that satisfy the conditional Euler equations, given a cross-section of assets,...

Investor attention drives analyst coverage. We find that, between 2012-2017, institutional investor attention explains 21.39% of the cross-sectional variation in analyst coverage, second only to market capitalization (22.09%). We build a model where limited investor attention drives information...

Do heightened capital requirements impose private costs on banks by adversely affecting their cost of capital? And if so, does the effect differ across different groups of banks? Using an international sample of listed banks over the period from 1990 to 2017, I find that equity investors adjust...

In this paper we find that the decline in the momentum profitability is partly driven by option trading. Momentum profits arise from the short leg and therefore on barriers to short selling. We find strong evidence that the presence of stock options creates alternate avenues for short selling,...

We explore how banks transmit central bank liquidity injections using unique variation in the ECB's 2011-12 Very Long-Term Refinancing Operations (VLTROs) which affected lending to firms discontinuously across credit ratings (i.e., within banks). We show that banks transmit liquidity differently...