In this paper, we examine the links among banking supervision, the volatility of financial flows, and economic growth. In particular, we explore whether banking regulation mitigates the adverse effects of capital flows volatility on economic growth. Using cross-country data over four decades, we find that banking supervision promotes economic growth by dampening the negative impact of volatile capital flows. The findings hold for both aggregate capital flows and its various components, and for both its net and gross counterparts, while they are also robust for various indicators of regulatory policies. The results support the argument that bank regulatory policy rules designed to ensure financial stability are beneficial to long-run economic growth.

In a 2014 paper, Garthwaite, Gross, and Notowidigdo examined the employment impact of the 2005 TennCare contraction. We extend their approach in several directions. First, we use consistent Conley-Taber estimation. Second, we transform their estimates to make them comparable to previous work; the transformed effects have large confidence intervals. We estimate their models using several larger data sets in an attempt to get more precise estimates but find that the results can be quite different. We consider two modifications to account for a major disruption to coverage in 2002, and one of these reduces the differences in the results.

When creditors do not honor human capital as collateral, firms can mediate financially by offering workers long-term wage contracts. The optimal contract specifies a wage consisting of a spot general skill component plus a component equal to the expected time-averaged value of the worker's specific skills with a competitor. Variations in the smoothed specific component are due only to changes in expectations about the likelihood of quitting a competing firm. The theory also explains interindustry disparities in wage paths and statistical discrimination by firms.

R. C. D'Arge, K. C. Kogiku; Economic Growth and the Environment123, The Review of Economic Studies, Volume 40, Issue 1, 1 January 1973, Pages 61–77, https:

IN the Far East, the overall volume of intraregional trade is not as substantial as that of Europe, but much larger than that of Latin America.2 One rather unique and very interesting feature of Far Eastern intraregional trade is that one country, namely, Japan, stands out prominently, from the point of view of both the character and magnitude of its trade. Japan contributed about one-third of the Far Eastern intraregional trade in the immediate prewar years (32.3 per cent for 1935, 34.5 per cent for 1937, and 38.o per cent for I938). Immediately after the cessation of hostilities, its share suffered a sharp reduction, but again became a significant percentage of the total in 1949 (I6.5 per cent). The ratio of Far Eastern intraregional trade to its total export, and Japan's share in intraregional trade showed a tendency to fluctuate together.3 Since Japan's share was about one-third in the prewar period and its intraregional imports were related to the volume of total intraregional exports, several questions may be raised with regard to the future role of Japan in the intraregional trade of the Far East. What are the initial and secondary effects of Japan's imports from the Far East on the intraregional exports of the countries of this region? Does such relationship in the prewar period remain true in the postwar period? If there is a change of preand postwar relationships, what are some of the reasons for the change? How are Japan's imports from the Far East related to the over-all exports of the region to all countries? This paper is a preliminary attempt at an analysis of the above questions.

We examine the economic determinants of short-sale supply, and its consequences for future stock returns. Lendable supply increases with expected borrowing costs and decreases with financial statement constructs that indicate overvaluation. Although rising loan fees help ease supply constraints, we find shares are still least available when they are most attractive to short sellers. Using a number of firm characteristics, we derive useful instruments for real-time loan supply and demand conditions in the lending market. Further, we show that (1) when lendable supply is binding (non-binding), short-sale supply (demand) is the main predictor of future stock returns, (2) abnormal returns to the short-side of nine well-known market anomalies are attributable solely to “special” stocks, and (3) loan fees significantly reduce the profitability of the short side and several of these anomalies cease to be profitable. Overall our evidence highlights the central role played by the supply of lendable shares in equity price formation and returns prediction.

We investigate the U.S. experience with macroprudential policies by studying the interagency guidance on leveraged lending. We find that the guidance primarily impacted large, closely supervised banks, but only after supervisors issued important clarifications. It also triggered a migration of leveraged lending to nonbanks. While we do not find that nonbanks use more lax lending policies than banks, we unveil important evidence that nonbanks increased bank borrowing following the guidance, possibly to finance their growing leveraged lending. The guidance was effective at reducing banks’ leveraged lending activity, but it is less clear whether it accomplished its broader goal of reducing the risk that these loans pose for the stability of the financial system. Our findings highlight the importance of supervisory monitoring for macroprudential policy goals, and the challenge that the revolving door of risk poses to the effectiveness of macroprudential regulations.

This paper examines the effect of several factors on the market share of investment banks that act as book managers in initial public offerings (IPOs) between 1984 and 1995. For established banks, IPO first-day returns, one-year abnormal performance, abnormal compensation, industry specialization, analyst reputation, and association with withdrawn offers have a significant impact on changes in market share. These factors have a more significant effect on market share changes in low-volume IPO markets. These factors have a less significant effect on market share, statistically and economically, for less established banks, consistent with the notion that less reputation is placed at risk.

This paper tests models of mutual fund market timing that allow the manager's payoff function to depend on returns in excess of a benchmark, and distinguish timing based on publicly available information from timing based on finer information. We simultaneously estimate parameters which describe the public information environment, the manager's risk aversion, and the precision of the fund's market-timing signal. Using a sample of more than 400 U.S. mutual funds for 1976–94, our findings suggest that mutual funds behave as highly risk averse, benchmark investors. Conditioning on public information improves the model specification. After controlling for the public information, we find no evidence that funds have significant market-timing ability.