Annual Conference

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Corporate Finance

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May 2023

Do Banks Compete on Non-Price Terms? Evidence from Loan Covenants

Rustam ABUZOV, Christoph HERPFER, Roberto STERI
We investigate the link between competition and non-price loan terms by exploiting a regulatory shock to banks’ ability to offer covenant-lite loans. As regulated banks demand more covenants, borrowers trade off staying with banks and receiving lower interest rates, but with covenants, against swi...
Keywords: non-price competition, shadow banks, leveraged lending, covenants, syndicated loans, relationship lending
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Annual Conference

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Corporate Finance

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May 2023

Do Hedge Funds Exploit Material Nonpublic Information?

Wei WANG, Yan YANG, Jingyu ZHANG
Serving on unsecured creditors’ committee (UCC) of a bankrupt firm, hedge funds gain access to material nonpublic information. Although hedge funds are prohibited from trading bankrupt firm’s securities with information access, less is known about whether such information access facilitates hedg...
Keywords: Bankruptcy, Unsecured Creditors’ Committee, Hedge Funds, Private Information, Trading
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Annual Conference

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Corporate Finance

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May 2023

Market-Based Innovation Policy: Evidence from High-Tech Incubators in China

Yue PAN, Tao SHU, Vincent YAO, Pengdong ZHANG
Using proprietary data of all high-tech incubators in China, we study a new approach by government to implement industrial policy through market intermediaries instead of directly allocating resources. Exploiting a highly localized industrial policy that targets different “strategic emerging indus...
Keywords: Entrepreneurship, Incubators, High-tech startups, Industrial policy, Innovation
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Annual Conference

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International Macroeconomics, Money & Banking

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May 2023

The Political Economy of Financial Regulation

Arkodipta SARKAR, Rainer HASELMANN, Shikhar SINGLA, Vikrant VIG
Increased interdependencies across countries have led to calls for greater harmonization of regulations to prevent local shock from spilling over to other countries. Using the rulemaking process of the Basel Committee on Banking Supervision (BCBS), this paper studies the process through which harmon...
Keywords: Financial Regulation, Harmonisation of rulemaking, Basel, Political economy, Regulatory Capture, Wat
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Annual Conference

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International Macroeconomics, Money & Banking, Senior Fellows/Fellows

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May 2023

Reserves were not so ample after all

Darrell DUFFIE, Adam COPELAND, Yilin (David) YANG
The Federal Reserve’s “balance-sheet normalization,” which reduced aggregate reserves between 2017 and September 2019, increased repo rate distortions, the severity of rate spikes, and intraday payment timing stresses, culminating with a significant disruption in Treasury repo markets in mid-S...
Keywords: Repo rates, reserves, Treasuries, payments, central-bank balance sheet
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