We study the evolution of investment-banking relationships from 1933 to 2007. Relationship exclusivity and client concerns for the state of their banking relationships were strong through the first part of our sample period but then entered a period of sharp decline beginning around 1970. We...

The following sections are included: Introduction What is Culture? Why is Bank Culture an Issue Now? How do we Explain Recent Cultural Failures? Possible Solutions Conclusions References

We present the first micro-level evidence of the transmission of shocks through financial networks. Using the network of credit default swap (CDS) transactions between banks, we identify bank CDS returns attributable to counterparty losses. A bank's own CDS spread increases whenever...

We discuss the commitment mechanisms that underpin social orderings. We categorize commitments in relationships along a hierarchy that runs from the most extralegal to the most legally intensive devices. Commitment devices are chosen in light of their social, legal, and technological contexts....

We introduce ethical agents into an analysis of decision making in a profiit-maximising firm. Agents can adopt a profitable new practice that may harm customers. Their decision reflects moral considerations, organisational culture, and compensation contracts. We analyse both utilitarian and...

We study the effect that internal information systems have upon a firm’s leverage and corporate governance choices. Information systems lower governance costs by facilitating more targeted interventions. But they also generate asymmetric information between firms and their investors. As a...

We analyze a general equilibrium model in which financial institutions generate endogenous systemic risk. Banks optimally select correlated investments and thereby expose themselves to re-sale risk so as to sharpen their incentives. Systemic risk is therefore a natural consequence of banks'...

On April 16, 2010 the Securities and Exchange Commission (SEC) filed a civil complaint against Goldman Sachs in the U.S. District Court for the Southern District of New York. The complaint alleged that Goldman violated the anti-fraud provisions of the federal securities laws, in connection with...

We discuss the role of professional standards in investment banking in light of Professor Tuch’s wide-ranging and thought-provoking analysis. Professor Tuch identifies an ethical role for regulation, and suggests that professional examinations should instill ethical standards into investment...

We analyse a model in which bank deposits are insured and there is an exogenous cost of bank capital. The former effect results in bank over-investment and the latter in under-investment. Regulatory capital requirements introduce investment distortions, which are a constrained optimal response...