We examine whether bank connections via common mutual fund ownership serve as a contagion channel affecting the systemic risk of the banking system. Examining this relation is important because common mutual fund ownership has increased dramatically over the past 20 years, and a buildup of...

This paper examines the impact of mandatory loan-level disclosure on the convenience yield of AAA-rated asset-backed securities. Relying on the put-call parity relationship to estimate the daily risk-free interest rate unaffected by the convenience features of safe assets, we first show that the...

Although balanced budgets are widely used throughout the world, there is considerable debate on whether they are effective. Poterba (1997) provides two theories on the effectiveness of balanced budget restrictions. The institutional irrelevance view suggests that balanced budget rules are...

We investigate the impact of accounting discretion on managers' incentives to invest in innovative projects. Using a theoretical model in which a manager chooses between an innovative and a conventional project, we show that allowing accounting discretion incentivizes the manager to invest in...

We survey research on financial accounting in the banking industry. After providing a brief background of the micro-economic theories of the economic role of banks, why bank capital is regulated, and how the accounting regime affects banks' economic decisions, we review three streams of...

This paper examines the extent to which bank holding companies trade-off the use of investment securities and interest rate swaps when managing interest rate risk inherent in their core business. We find that both securities and swaps are used to hedge interest rate risk and that these two types...