We show that the Dodd-Frank Act stress tests worsened bank loan terms and reduced vacancy postings by 16% among private firms with prior relationships with stress-tested banks. The decline is concentrated in postings for less-educated workers, indicating a contraction in hiring along this margin. These effects are temporary. Firms respond to tighter credit by shifting toward smaller financial institutions. This adjustment increases loan sizes from both new and existing lenders, which mitigates the impact of stress tests on labor demand over time.

Traditional negotiation trading dominates the electronic limit order book (LOB) of the X-Bond platform in the Chinese government bond market. Using a unique dataset, we conduct the first systematic study of the X-Bond’s role. We find that: (1) trades via LOB are notably more cost effective than via negotiation, with cost differences influenced by factors such as trader groups, bond types, trade sizes, and on-/off-the-run status; (2) electronic trading reduces the costs of negotiation trades through increased liquidity, an information channel, and a liquidity’s externality; and (3) due to the absence of an interdealer market, the X-Bond platform primarily serves as a liquidity source of last resort for managing inventory risk.

This paper investigates how historically intensive irrigation systems influenced enduring institutional and cultural traits that constrain firms’ access to finance. Combining geo-climatic measures of irrigation potential with firm-level data from 174 ethnic regions across 146 countries, we find that historically irrigated societies are characterised by weaker property rights, lower trust in financial institutions, and greater reliance on internal financing. Firms in these regions report more severe financial obstacles and higher rejection rates from banks. Implementing a spatial regression discontinuity design around the Lower Rhine and using irrigation potential as an instrument, we provide evidence consistent with a long-term influence of historical irrigation on modern credit frictions. The effects are most evident among privately owned domestic firms, unaffiliated firms, and those with higher female ownership. These findings indicate that ancient irrigation infrastructure is associated with persistent imprints on contemporary financial markets.

• We investigate illegal insider trading in China’s stock market. • Cross-provincial variation in legal quality affects insider-trading profitability and risk. • Stronger legal environments raise regulatory risk and enhance pricing efficiency. • Results show evidence consistent with deterrence in the form of fewer low-return trades. • Lower information efficiency enhances the positive impact of legal quality on insider-trading profitability. This study examines how provincial legal environments shape the profitability of illegal insider trading in China. Using 521 adjudicated insider-trading cases from 2006 to 2018, we hand-collect detailed information from court judgments and CSRC sanction documents to reconstruct holding-period returns and illicit gains. We combine these data with established provincial indices of legal development and firm-level measures of ex ante litigation risk to test whether legal risk is priced in illegal insider trades. We find that stronger provincial legal environments are associated with significantly higher per-trade profitability among illegal trades that insiders execute after accounting for enforcement risk. This pattern is consistent with a risk-compensation mechanism rather than a failure of enforcement, as stricter legal environments deter low-return trades and leave only trades with sufficiently high expected gains. Firm-level litigation exposure further strengthens this effect. The results remain robust to sample-selection corrections, alternative return measures and a range of heterogeneity tests. Overall, our findings show how institutional variation in enforcement shapes insider incentives and the risk–return trade-off of illegal trading.

By decomposing close-to-close mid-quote returns of ETFs into their overnight and intraday components, we find that the overnight return is significantly positive, whereas the intraday return is negative. This overnight–intraday return differential is ubiquitous across ETFs tracking different asset classes or assets located in different time zones. This phenomenon cannot be explained by differences in overnight and intraday risks, macroeconomic announcements, or information asymmetry. Instead, our analysis reveals that the return pattern is primarily driven by demand shocks from retail investors and limited supply from arbitrageurs. These results indicate that the convenience of buying ETFs during intraday trading hours carries a hidden cost to investors.