I test theories of the recent financial crisis by studying how banks’ pre-crisis investments connect to their CEOs’ beliefs. Using different proxies for beliefs, I find banks with larger housing investments and worse crisis performance had CEOs who were more optimistic ex ante. Banks with the most optimistic CEOs experienced 20 percentage points higher real estate loan growth, and 15 percentage...

This paper presents evidence that reductions in mortgage interest rates associated with prepayment penalties are greater for riskier borrowers, as measured by mortgage type, credit scores, and local incomes and education levels. This is consistent with an efficiency view that, by reducing the reclassification risk faced by lenders, prepayment penalties can be welfareimproving. Additional findin...

Why do asset price bubbles continue to appear in various markets? This paper provides an overview of recent literature on bubbles, with significant attention given to behavioral models and rational models with frictions. Unlike the standard rational models, the new literature is able to model the common characteristics of historical bubble episodes and offer insights for how bubbles are initiat...

Abstract. Homthong M, Kaewpuk W, Yamsuan S, Thongsima A, Mokkapan K, Pikulthong V. 2022. Screening of indole-3-acetic acid PGPB from three agricultural systems at Nakhon Pathom, Thailand. Biodiversitas 23: 5935-5941. Plant growth-promoting bacteria (PGPB) are associated with plant roots and enhance growth via a variety mechanisms, including fixation atmospheric nitrogen, solubilization phosphor...

Developing Böhm-Bawerk’s (1914) Macht oder ökonomisches Ge-setz, we characterize the different intervention modalities as coercive «fixing» of prices, goods (quantities or modes performing) persons, also with their effects. Given that subjective but real forces underlying market processes respond effects which are opposite to those pursued, «intervener» controller would be induced an in crescen...

This paper identifies the effect of financing constraints on firms’ labor demand. We exploit exogenous funding shocks to German savings banks during the US mortgage crisis that are unrelated to local conditions. We find that firms with credit relationships with affected banks experienced a significant decline in employment and in labor compensation relative to firms whose credit relationships w...

We propose a measure of systemic risk, ∆CoVaR, defined as the change in the value at risk of the financial system conditional on an institution being under distress relative to its median state. Our estimates show that characteristics such as leverage, size, maturity mismatch, and asset price booms significantly predict ∆CoVaR. We also provide out-of-sample forecasts of a countercyclical, forwa...

Yes, size actually matters. This paper models the strategic interaction between banks and the government when bailouts are possible. I analyze how imperfect common knowledge about the government’s bailout policy affects the ex-ante leverage choice for each bank. Large banks, by internalizing the effect of their size on the likelihood of being bailed out, are willing to take more leverage. In eq...

Financial innovation has increased diversification opportunities and lowered investment costs, but has not reduced the relative cost of active (informed) investment strategies relative to passive (less informed) strategies. What are the consequences? I study an economy with linear production technologies, some more risky than others. Investors can use low quality public information or collect h...