Research highlight
The Impact of Risk Cycles on Business Cycles: A Historical View
The Review of Financial Studies, 36(7), 2922–2961
How global risk perceptions affect economic growth
The relationship between financial risk and economic growth is complex. This column finds that perceptions of high risk unambiguously harm growth...
Dark Trading and Alternative Execution Priority Rules
Traders’ choice between lit and dark trading venues depends on market conditions, which are affected by execution priority rules in the dark pool...
Financial Volatility and Economic Growth, 1870–2016
We investigate the causal impact of financial risk on economic growth, using a panel spanning 150 years and 74 countries. Persistent low risk...
The Efficient IPO Market Hypothesis: Theory and Evidence
We derive the optimal underwriting method and the quantitative IPO pricing rule that this method implies in a market with informational frictions...
Learning from History: Volatility and Financial Crises
The Review of Financial Studies, Volume 31, Issue 7, Pages 2774–2805.
Low risk as a predictor of financial crises
Reliable indicators of future financial crises are important for policymakers and practitioners. While most indicators consider an observation of high...
Learning from History: Volatility and Financial Crises
We study the effects of stock market volatility on risk-taking and financial crises by constructing a cross-country database spanning up to 211 years...
Volatility, financial crises and Minsky's hypothesis
Does low volatility in financial markets mean that another financial crisis is more likely? And should we be worried when everything is OK? This...
Can We Prove a Bank Guilty of Creating Systemic Risk? A Minority Report
Since increasing a bank's capital requirement to improve the stability of the financial system imposes costs upon the bank, a regulator should ideally...
Model risk and the implications for risk management, macroprudential policy, and financial regulations
Risk forecasting is central to financial regulations, risk management, and macroprudential policy. This column raises concerns about the reliance on...
Model Risk of Risk Models
This paper evaluates the model risk of models used for forecasting systemic and market risk. Model risk, which is the potential for different models...
