The regulatory framework for financial advisors is fragmented, with multiple state and federal regulators. Prior empirical literature on financial advisors has largely focused on a single subset of financial advisors, but we create a database containing brokers regulated primarily by FINRA, investment advisers regulated by the SEC or state securities regulators, and insurance producers regulated by state insurance regulators. There is significant overlap across the regimes; more than 40% of the advisors in our data are registered with more than one regulator. This overlap has implications for labor allocation and market discipline. For example, of the individuals who exit FINRA’s broker regime, 79% were jointly registered in insurance upon exiting FINRA’s regime. This could be efficient if it reflects bad actors who transition to lower risk work, but our evidence shows that these advisors continue to engage in financial planning after they move to the insurance side, as over 90% maintain licenses to sell annuities. Moreover, those who committed misconduct when regulated by FINRA continue to have heightened levels of misconduct in insurance. Our findings have additional implications for regulatory discipline. In 2018 and 2019, FINRA proposed rules designed to nudge “bad” brokers out of the industry. We show that these proposals caused thousands of high-risk brokers to exit the FINRA broker regime, but that the majority of these individuals did not leave financial services—98% are currently registered with state regulators as insurance producers.

Errors in survey expectations display waves of pessimism and optimism. This paper develops a novel theoretical framework of time-varying beliefs capturing this fact. In our model, dynamic beliefs arise endogenously due to agents’ attitude towards alternative models. Decision-maker’s distorted beliefs generate countercyclical risk aversion, procyclical portfolio weights, and countercyclical equilibrium asset returns. A calibrated version of our model is shown to jointly match salient features in survey data and equity markets.

We attribute variation in the strength of the U.S. dollar and its covariance with other currencies to economic primitives using a global asset demand system. We take global investor savings, asset supply, and monetary policy as exogenous primitives, and show how these variables explain dollar exchange rate behavior. Prior to the global financial crisis, global savings and demand shifts explain dollar depreciation, whereas post-crisis they explain dollar appreciation. Interest rates and cross-border bank loans explain short-term fluctuations in the dollar, but decline in significance over longer horizons. When explaining the dollar factor structure, we find that global savings explain common variations across dollar exchange rates, whereas investor demand shifts account for cross-sectional heterogeneity in dollar betas.

Jensen’s (1986) analysis of the agency costs of free cash flow radically transformed our understanding of corporate payout policy. This paper details the main pre-Jensen advances in the payout literature, explains how his analysis profoundly altered the way financial economists view payout policy, and discusses prominent regularities that provide real-world texture for understanding the importance of his insights about payout policy. These regularities include: (i) the dominance (measured as a percent of value or earnings) of the public equity markets by firms in the distribution phase of the corporate lifecycle; (ii) changes since the 1980s in aggregate cash payouts, the profitability of payers, payout rates, and the set of firms that dominate the payout supply; and (iii) the recent politicization of share repurchases.

We examine the impact of fintech on firm labor demand, job turnover, and firm performance. Occupations with higher exposure to fintech experience a net decline in job postings and employment, though both complementary and substitutive effects emerge across different sectors. Fintech blurs traditional industry boundaries, creating demand for workers with a combination of finance and technology skills. In response, firms upskill through hiring, reallocate talent internally, and pivot innovation to new areas. As a result, firms are better equipped to absorb the shock than individual workers, with innovative firms even experiencing growth in employment, sales, and productivity upon fintech disruption.

We exploit the 2020 Treasury market shock to analyze how external and internal constraints impact arbitrageurs. Using regulatory filings, we find that hedge funds reduced arbitrage activities and increased cash holdings, despite stable credit and low contemporaneous redemptions. Creditors’ regulatory and liquidity constraints were not propagated to hedge funds through repo—Treasury arbitrageurs’ predominant financing source. Fund-creditor borrowing data reveal more regulated dealers provided, and more important clients received, disproportionately higher funding. Value-at-risk reported by funds suggests internal risk constraints were binding. Our results support theoretical predictions that arbitrageur risk constraints and precautionary liquidity management can amplify market instability even when contemporaneous financing remains resilient.

We study the socially optimal level of illiquidity in an economy populated by households with taste shocks and present bias with naive beliefs. The government chooses mandatory contributions to accounts, each with a different pre-retirement withdrawal penalty. Collected penalties are rebated lump sum. When households have homogeneous present bias, β, the social optimum is well approximated by a single account with an early-withdrawal penalty of 1−β. When households have heterogeneous present bias, the social optimum is well approximated by a two-account system: (i) an account that is completely liquid and (ii) an account that is completely illiquid until retirement.