infonet-economy

We study the risk-taking channel of monetary policy in Bolivia, a dollarized country where monetary changes are transmitted exogenously from the USA. We find that a lower policy rate spurs the granting of riskier loans, to borrowers with worse credit histories, lower ex-ante internal ratings, and weaker ex-post performance (acutely so when the rate subsequently increases). Effects…

Bhattacharya et al. (2012) shows that many investors are reluctant to accept and follow financial advice. This study analyzes three possibilities which could cause this misbehavior: non-monetary costs, willingness to become informed and comprehensibility of financial information. As so many investors do not accept financial advice, the study further analyzes if it is beneficial to…

In a recent experimental study of intertemporal risky decision making, Andreoni and Sprenger (2012) find that subjects exhibit a preference for intertemporal diversification, which is inconsistent with discounted expected utility theory. It was claimed that their results are also at odds with models involving probability weighting, such as rank-dependent utility and cumulative…

Any solvency regime for financial institutions should be aligned with the two fundamental objectives of regulation: protecting liability holders and securing the stability of the financial system. From these objectives wederive two normative requirements for capital adequacy tests, called surplus and numeraire invariance, respectively. We characterize capital adequacy tests that…

"Wer Moral hat, geht zur Bank." Wirtschaftsnobelpreisträger Robert Shiller meint dies ernst: Jede menschliche Tätigkeit von Bedeutung muss finanziert werden, und man kann wenig Gutes für die Welt im Alleingang erreichen.

In this paper we analyze which graphical representation of risk is most effective in supporting investors to assess the risk and return characteristics of a fund. Moreover, we test on which criteria the investors base their risk taking behavior. To this end we compare return bar charts and price line charts, combined with some additional information such as a risk scale or a gain and…

Die Schweiz geht zu einer neuen Wirtschaftsform über. Weiss (freie Marktwirtschaft) oder Schwarz (reine Staatswirtschaft) war zwar nie, dem Bundesrat schwebt aber eine besondere Schattierung von Dunkelgrau vor. Er sieht die Unternehmen neu als verlängerten Arm des Staates. «Der Bund erwartet von den Wirtschaftsakteuren, dass sie ihre gesellschaftliche Verantwortung wahrnehmen»,…

We investigate geoengineering as a possible substitute for adaptation and mitigation measures to address climate change. With the help of an integrated assessment model, we distinguish between the effects of solar radiation management on atmospheric temperature levels and its side-effects on ecosystems. To address the uncertainty regarding the magnitude of side-effects, we rely on a…

Past trends in a broad range of fundamental variables predict currency returns. We document that a trading strategy that goes long currencies in countries with strong economic momentum and short currencies in countries with weak economic momen- tum exhibits an annualized Sharpe ratio of about one and yields a significant alpha when controlling for standard carry, momentum, and value…