Knowledge that Transforms

This paper identifies a novel channel—corporate fraud—through which local firms protect themselves during anti-mafia periods. We initially explore the impact of the anti-mafia campaign on mafia-like forces captured by accepted mafia-like criminal cases. The results indicate that the average number of accepted mafia-like criminal cases increases by 10.03%. More importantly, the accepted mafia-like criminal cases committed by firms also exhibit a notable increase, mainly within the first 30 months of the anti-mafia campaign. We then theorize that the anti-mafia campaign may have two contradictory effects on corporate fraud: deterrence and self-protection. The main results show that the self-protection effect prevails over the deterrence effect and that firms are more likely to commit fraud to strategically protect themselves from potential losses. The baseline findings reveal that the fraud occurrence of an average firm increases by 44.07% during anti-mafia periods.

We examine whether the European Central Bank (ECB) President’s communication tone is systematically related to market-based measures of euro area bank risk. Using Loughran–McDonald dictionaries, we construct quarterly indicators of textual tone and readability from ECB presidential statements over 2008Q1–2024Q4. We link these indicators to country-level bank credit default swap (CDS) indices for euro area member states. Our analysis focuses on uncertainty-related and constraining language as communication dimensions especially relevant to financial stability. We estimate panel regressions with macro-financial controls, horse-race specifications, and deploy principal component analysis to distinguish overlapping sentiment dimensions, with additional robustness checks in first differences. A more uncertainty-laden and constraining ECB presidential tone is associated with higher bank CDS spreads, even after controlling for macro-financial fundamentals. Lower readability of ECB statements is likewise linked to greater bank stress, indicating that both the tone and the clarity of central bank communication matter for bank-risk pricing. The association between bank CDS spreads and ECB communication tone is more pronounced during turbulent than tranquil periods. Our findings are consistent with a sentiment-guidance channel through which central bank communication is reflected in perceptions of bank fragility beyond traditional policy and macro-financial factors. They indicate that the tone, complexity, and crisis-contingent framing of ECB communication are economically relevant for financial-stability pricing and the sovereign-bank nexus in the euro area.

This study investigates the impact of skilled labor mobility on bank fragility. We construct a novel bank-level measure of skilled labor mobility using job-posting data and show that it significantly increases bank default probability. The effect is driven entirely by demand for risk officers, identifying risk management capacity as the specific mechanism. The effect is amplified by competition and is concentrated among banks experiencing net employee outflows. We further document that legal restrictions on labor mobility weaken the potential detrimental effect. Our findings indicate that skilled labor mobility exacerbates bank fragility, yet targeted policies can bolster resilience against possible adverse effects from labor market frictions.

We develop a credit-risk based framework for macroprudential policy that treats systemic risk as the credit exposure of a policymaker to a portfolio of supervised banks. Using a structural credit model estimated from Credit Default Swap (CDS) prices, we derive the socially optimal capital buffers per bank by balancing the benefits of lower systemic risk against the economic costs of higher capital requirements through reduced credit supply. Applying this framework to Europe’s systemic banks, we find that the market-based optimal buffers are substantially higher than those currently in use and vary significantly across institutions. Conditional on current country averages, within-country buffers are aligned close to optimally; suboptimality mostly arises from substantial differences between country averages.

This study extends Acharya and Naqvi’s (2012) theory of liquidity-driven risk-taking to digital asset markets by examining the relationship between U.S. and Chinese excess-liquidity conditions and cryptocurrency returns. Using monthly panel data for ten major cryptocurrencies from 2019 to 2024, and defining excess liquidity and economic policy uncertainty (EPU) as binary state indicators, the baseline results show that periods of U.S. excess liquidity are associated with a 12.1 percentage-point increase in average monthly cryptocurrency returns. This liquidity-return premium is reduced by approximately 54% during episodes of rising U.S. EPU. Chinese excess-liquidity regimes are associated with a 9.3 percentage-point increase in monthly returns, but this positive association is more than offset under rising Chinese policy uncertainty, as indicated by a −13.8 percentage-point interaction effect. These findings are consistent with the interpretation that surplus-liquidity conditions coincide with stronger cryptocurrency returns, in line with risk-taking and stablecoin-based arbitrage channels, whereas rising-EPU regimes weaken the liquidity-return relationship by increasing risk aversion and reducing arbitrage efficiency. The results highlight a macro-financial channel through which liquidity conditions are linked to digital asset markets and suggest that regulators should monitor stablecoin issuance, leverage, funding conditions, and liquidity-driven speculative pressure in the crypto market.

This study examines how the introduction of China's deposit insurance system affects bank risk-taking, using panel data on 117 commercial banks from 2010 to 2023. Employing a theoretical framework together with system GMM and difference-in-differences estimations, we find that deposit insurance does not uniformly enhance stability; instead, it may increase idiosyncratic risk by weakening market discipline. The effect is concentrated among local commercial banks, with large commercial banks showing comparatively limited responses. Corporate governance and financial leverage serve as important transmission channels: banks with more concentrated ownership or higher leverage exhibit stronger moral hazard incentives following the reform. Robustness tests using the provision coverage ratio confirm these patterns. Overall, the results highlight the heterogeneous impact of deposit insurance across bank types and underscore the importance of governance quality and capital structure in mitigating risk-taking incentives under explicit insurance schemes.

Publisher Copyright: © 2026 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license. http://creativecommons.org/licenses/by/4.0/