June 26th, 2009 by igmforum editor
By Luigi Zingales, Paola Sapienza, and Luigi Guiso
The Economist, June 26th, 2009
Professors Zingales, Sapienza, and Guiso’s new research examines American homeowners’ propensity to default when the value of a mortgage exceeds the value of their house, even if they can afford to pay their mortgage.
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For additional information, please see Professors Zingales, Sapienza and Guiso’s paper, Moral and Social Constraints to Strategic Defaults on Mortgages.
June 25th, 2009 by igmforum editor
by Atif Mian and Amir Sufi
Wall Street Journal, June 25th, 2009
Using research funded by the Initiative on Global Markets at the University of Chicago’s Booth School of Business, Professors Atif Mian and Amir Sufi argue that the “rise in house prices from 2002 to 2006 was a main driver of economic growth during this time period, and the subsequent collapse of house prices is likely a main contributor to the historic consumption decline over the past year.”
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May 14th, 2009 by igmforum editor
The Economist; May 16th, 2009
An new article in the May 16th Economist details new research from Professor Luigi Zingales and his co-author Oliver Hart regarding bank regulation.
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For additional information, please see Professors Zingales and Hart’s article, A New Capital Regulation for Large Financial Institutions
May 14th, 2009 by igmforum editor
By Luigi Zingales, R. Glenn Hubbard, and Hal Scott
Wall Street Journal; May 6th, 2009
The results of bank stress tests — expected tomorrow — will no doubt prompt calls for further government guarantees and capital injections. But continuing to prop up the banks with government cash is a mistake. There is a better approach.
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May 1st, 2009 by igmforum editor
Luigi Zingales and Paola Sapienza
City Journal; April 29, 2009
The word for “crisis in Chinese, weiji, is written with two characters: one (wei) means danger; the other (ji) means opportunity. That’s because every crisis challenges the status quo and in so doing creates the opportunity for something new to emerge. “This process of Creative Destruction,” wrote economist Joseph Schumpeter, “is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in.”
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April 28th, 2009 by igmforum editor
Douglas W. Diamond and Raghuram G. Rajan
FT.com; April 20th, 2009
Why are banks so reluctant to lend? One possibility is that they worry about borrower credit risk, though worries need to be extreme to justify the substantial drop in term lending. A second is that they may worry about having enough liquidity of their own, if their creditors demand funds. Yet, the many Federal Reserve facilities that have been opened should assuage these concerns.
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April 24th, 2009 by igmforum editor
By Anil Kashyap
April 24, 2009
The details regarding the procedures employed in the so-called “stress tests” were released today. The results will be made public next Friday, but we can already tell that there are three serious problems with the SCAP. These shortcomings involve the starting point, the ending point and the paths assumed in the exercise…
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April 21st, 2009 by igmforum editor
By Raghuram Rajan
Economist.com April 8, 2009
In a guest article, Raghuram Rajan argues for a regulatory system that is immune to boom and bust
AS THE G20 summit showed, we typically regulate in the midst of a bust. That is when righteous politicians feel the need to do something, bankers’ frail balance-sheets and vivid memories make them eschew risk, and regulators have their backbones stiffened by public disapproval of past laxity.
But we reform under the delusion that the regulated, and the markets they operate in, are static and passive, and that the regulatory environment will not vary with the cycle. Ironically, faith in draconian regulation is strongest at the bottom of the cycle, when there is little need for participants to be regulated. By contrast, the misconception that markets will take care of themselves is most widespread at the top of the cycle, at the point of most danger to the system. We need to acknowledge these differences and enact cycle-proof regulation.
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April 6th, 2009 by igmforum editor
Myron Scholes Forum, April 1, 2009
Malcolm Knight, Vice Chairman for Deutsch Bank Global Group will discuss the policies and procedures that will govern the future of financial regulation.
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