Thought leadership in academic finance is more unequal than in other fields. Using data on the top 2% of scientists across all fields from Ioannidis et al. (2019, 2020), we show that the set of top scientists in finance is less diverse in terms of gender and geography than in economics and other...

As scientists, we are conditioned to constantly look for new methods to advance our knowledge. But, sometimes we can achieve our goals more easily by using old methods better. This commentary lists some ABCs of empirical work that I think are useful to remember. The term “ABCs” is...

Moralistic trust arises when people believe others share their moral values. I examine whether trust in the finance industry has a moral foundation by comparing values and attitudes of finance professionals with those of the general population in two data sets: a unique data set on values of...

Banks face two different kinds of moral hazard problems: asset substitution by shareholders (e.g., making risky, negative net present value loans) and managerial rent seeking (e.g., investing in inefficient 'pet' projects and consuming perquisites that yield private benefits). The privately...

We address two questions: (i) Are bank capital structure and value correlated in the cross section, and if so, how? (ii) If bank capital does affect bank value, how are the components of bank value affected by capital? We first develop a dynamic model with a dissipative cost of bank capital that...

We develop a theory of optimal bank leverage in which the benefit of debt in inducing loan monitoring is balanced against the benefit of equity in attenuating risk-shifting. However, faced with socially-costly correlated bank failures, regulators bail out creditors. Anticipation of this...

We develop a theory of optimal bank leverage in which the benefit of debt in inducing loan monitoring is balanced against the benefit of equity in attenuating risk-shifting. However, faced with socially-costly correlated bank failures, regulators bail out creditors. Anticipation of this...