Industrial policies greening the economy aim to accelerate the transition to net zero. We show that the United States (US) Inflation Reduction Act improved the supply of climate finance globally. Using granular data on global investment funds, we identify a novel international spillover channel...

This report provides a brief overview of the achievements of the Rapid Social Response Multi-Donor Trust Fund (RSR) in the fifteen years from its inception during the global financial crisis of 2008/9 to its closing in 2024. Over these fifteen years, the RSR awarded $149.8 million in 420 grants...

This publication analyses the advantages and disadvantages of carbon credits compared to other financing instruments for protecting and restoring coastal ecosystems. Nine instruments are examined, including emission credits, biodiversity certificates, development cooperation, and blue bonds....

We study how sustainability disclosure regulation affects mutual fund flows and portfolio choices, accounting for investor heterogeneity. Guided by a model of ESG investing under uncertainty, we exploit the introduction of the European Sustainable Finance Disclosure Regulation (SFDR) as a...

Managers of actively managed funds do not maintain a constant investment style. Instead, their factor loadings change over time. These changes are especially large following quarters with extreme returns and fund flows and arise from both active portfolio reallocations and passive style drift....

We introduce a simple yet powerful method for enhancing mutual fund performance prediction by combining individual predictors into a composite predictor. This composite approach integrates information from 19 well-established return-based and portfolio holdings-based predictors from the...

We present improved out-of-sample predictability of future fund flows using state-of-the-art machine learning methods. Nonlinear machine learning models significantly outperform linear models in terms of out-of-sample R-squared. Using interpretable ML methods, we identify past flows and the...

Using granular security-level data from bond funds domiciled in the US and the euro area, we identify a market-based risk-taking channel of monetary policy transmission via the credit-risk and the maturity structure of bond funds' portfolios. We measure credit risk at the fund level as the...

We study how monetary policy is transmitted through the open-end investment fund (OEIF) sector and how this transmission depends on fund fragility. Using high-frequency identified ECB monetary policy surprises and daily share-class data on German-domiciled OEIFs from 2010 to 2023, we show that...

The Recovery and Resilience Facility (RRF), which was adopted to support economic recovery from the COVID-19 crisis, represents the first large-scale EU-wide investment initiative, including decarbonisation goals. Yet temporary RRF spending will not be sufficient to meet the climate targets in...

This study examines the performance dynamics of U.S. options exchange-traded funds (ETFs), whose investment strategy involves options contracts. Analyzing monthly returns data from February 2014 to April 2023, we evaluate the risk-adjusted performance, volatility, and market sensitivity of U.S....

This paper assesses the environmental performance of sustainability-related investment funds compared to conventional ones across three dimensions: financed activities, portfolio carbon footprint, and investment in firms with ambitious science-based targets. We identify ESG funds using...

We explore whether investment funds transmit spillovers from local shocks to financial markets in other economies. As a laboratory we consider shocks to financialmarket beliefs about the probability of a rare, euro-related disaster and their spillovers to Asian sovereign debt markets. Given...

This paper examines the determinants of investor flows into U.S. corporate bond mutual funds, with a focus on monetary policy and fund-specific characteristics during the COVID-19 crisis. These funds, as non-bank financial intermediaries, are vulnerable to sudden investor redemptions due to...

Recently, funds and corporations have adopted environmental/social/governance (ESG)-related criteria as increasingly important criteria when evaluating investments. The ESG scores of mutual funds, which pool money from many individuals, are, therefore, significant as a sign of social commitment...