Cross-border Mamp;As can trigger a higher international taxation of the target's income. Non-resident dividend withholding taxes may be imposed by the target country, while additional corporate income taxation can be imposed by the acquiring country. This paper examines how these additional tax...

One of the most important recent innovations in financial markets has been the development of credit derivative products that allow banks to more actively manage their credit portfolios than ever before. We analyse the effect that access to these markets has had on the lending behaviour of a...

The new markets for credit derivatives allow for buying protection on sovereign debt. This paper considers the implications for sovereign debt crises. We show that the availability of credit protection lowers ex-ante debtor moral hazard by allowing a bondholder to improve his bargaining position...

In this paper, we study the impact of credit risk transfer (CRT) on the stability and the efficiency of a financial system in a model with endogenous intermediation and production. Our analysis suggests that with respect to CRT, the individual incentives of the agents in the economy are...

In this paper we study the impact of credit risk transfer (CRT) on the stability and the efficiency of a financial system in a model with endogenuous intermediation and production. Our analysis suggests that with respect to CRT, the individual incentives of the agents in the economy are...

This paper proposes a portfolio choice model in which investors are subject to liquidation risk and face higher costs in the event of joint liquidation (as was observed during the crisis of 2008-2009). The risk of joint liquidation creates an incentive for investors to choose heterogenous...

A puzzle posed by the subprime crisis is that even though financial development has made traditional bank assets less opaque, the opacity of banks themselves seems to have increased. This paper offers an explanation. I show that financial development which reduces the opacity of bank assets can...

We propose a new method for measuring the quality of banks' credit portfolios. This method makes use of information embedded in bank share prices by exploiting differences in their sensitivity to credit default swap spreads of borrowers of varying quality. The method allows us to derive a credit...

This paper examines the relation between the new markets for credit default swaps (CDS) and banks' pricing of syndicated loans to U.S. corporates. We find that changes in CDS spreads have a significantly positive coefficient and explain about 25% of subsequent monthly changes in aggregate loan...

This paper develops a model in which performance evaluation causes runs by fund managers and results in asset fire-sales. Performance evaluation nonetheless is efficient as it disciplines managers. Optimal performance evaluation combines absolute and relative components in order to make runs...