How susceptible to contagion are bank deposits associated with financial inclusion? To assess this susceptibility, we analyze the behavior of deposits around three significant events of bank failure in the Philippines. We conduct the event studies with the advantage of a unique dataset that disaggregates deposits by size at the town level. We show that both small and large deposits are withdrawn up to 4–5 quarters before the bank’s closure. We take advantage of this distinction between small and large deposits to test for contagion. Applying difference-in-difference regressions, we find evidence of contagion: the closure of a large bank leads to withdrawals at banks in neighboring towns by depositors both large and small. This is the case for two of the three events, and when the data is taken collectively. That there is a market for information affects deposit insurance as a safety net for depositors and as a disciplining tool for banks. There are also liquidity considerations that banks need to consider. In any case, we consistently find the behavior of small depositors to be no different from that of large depositors. Hence, if financial inclusion is about access to bank deposits, it is not likely to heighten systemic risks nor mitigate them.

Financial institutions, especially in Europe, hold a disproportionate amount of domestic sovereign debt. We examine the extent to which this home bias leads to capital misallocation in a real business cycle model with imperfect information and fiscal stress. We assume banks can hold sovereign debt according to a zero-risk weight policy and contrast this scenario to one in which banks weight the sovereign debt according to default probabilities. Banks are assumed to miscalculate the probability of a disaster state due to moral hazard and imperfect monitoring. This distortion pushes the economy away from the first-best allocation. We show that the zero risk weight policy exacerbates these distortions while a non-zero risk-weight improves allocations. The welfare costs associated with zero-risk weight policies are large. Households are willing to give up 3.2 percent of their consumption to move to the first-best allocation, whereas in the economy with non-zero risk-weights households are willing to give up only 1.2 percent of their consumption to move to the first-best allocation.

We analyze the role of federal funds rate volatility in affecting risk premium as measured by various money market spreads during the 2007–2009 financial crisis. We find that volatility in the federal funds market contributed to elevated Overnight Index Swap (OIS) spreads of unsecured bank funding rates during the crisis. Using OIS as a proxy for market expectations, we also decompose London Inter-Bank Offered Rate (Libor) into its permanent and transitory components in a dynamic factor framework and show that increased volatility in the federal funds market contributed to substantial transitory movements of Libor away from its long-run trend during the financial crisis.

We examine the impact of stock-price formation process on firms’ dividend smoothing using Regulation SHO. We find that pilot firms are more likely to increase dividends and less likely to omit them during the pilot program; however, they are more likely to decrease dividends after the program ends. These firms also smooth less and have higher adjustment speeds. Our findings are more pronounced for firms with higher information asymmetry, stronger financials, and weaker governance. In general, this study shows that financial markets tend to have a significant and long-lasting impact on dividend smoothing policy.

We examine how community banks respond to liquidity shocks created by natural disasters. We address community banks’ responses to liquidity shocks due to their focused geographic and economic presence, which coincide with their communities’ exposure to the disasters and the ability of the local banks to meet their needs. We find that community banks respond to liquidity shocks by managing their balance sheet, rather than any single balance sheet account. In particular, we find that they respond to the liquidity needs of their communities by increasing loans as deposits are withdrawn.

The present study investigates the impact of a target entity’s corporate social responsibility (CSR) credentials, board diversity, and stock return synchronicity on analyst coverage decisions. Based on more than 33,000 stock recommendations on UK listed companies, we significantly deepen and extend the relevant literature (Kumar, 2010; Li et al, 2013; and Li et al., 2024) in several important ways. We find female analysts are more likely than male analysts to impound CSR information into stock coverage decisions for entities with intermediate recommendations. For firms with more extreme economic prospects. i.e., at strong buy and sell levels, the positive effect of CSR performance on female analyst coverage weakens. After controlling for the CSR characteristics of a stock, results suggest female analysts are more likely to cover firms with gender-inclusive boards. Results accord with a narrative emphasizing female analysts’ weaker access to firms with less gender-inclusive boards. Our account adds new context and application to the emerging corporate finance literature on gender-based homophily. Finally, we report limited difference in the stock return synchronicity of firms covered by male and female analysts.

This paper provides an overview of visual analytics—the science of analytical reasoning enhanced by interactive visualizations tightly coupled with data analytics software—and discusses its potential benefits in monitoring systemic financial stability. The core strength of visual analytics is to combine visualization's high-bandwidth information channel to the human analyst with the flexibility and power of rapid-iteration analytics. This combination is especially valuable in the context of macroprudential supervision, which is increasingly dominated by large volumes of dynamic and heterogeneous data. Our contribution is to describe and categorize the analytical challenges faced by macroprudential supervisors, and to indicate where and how visual analytics can increase supervisors’ comprehension of the data stream, helping to transform it into actionable knowledge to support informed decision- and policy-making. The paper concludes with suggestions for a research agenda.