Title: “A Tale of Two Runs: Depositor Responses to Bank Solvency Risk”
Co – Authors: Raj Iyer and Nick Ryan.
In this paper we examine how depositor composition affects bank fragility. We examine a bank that has both low and high solvency risk shocks to see if depositors behave uniformly in the two shocks. We find differential behavior in high and low solvency-risk shocks from depositors who have loans and bank staff. In contrast depositors with older accounts and those with more frequent past transactions run more, irrespective of the underlying solvency risk. Our results suggest depositor composition affects bank fragility and helps characterize stable deposits.
Professor Raman Uppal
Title: “Comparing Different Regulatory Measures to Control Stock Market
Volatility: A General Equilibrium Analysis”
Co – Authors: Adrian Buss, Bernard Dumas and Grigory Vilkov
In this paper, we compare the effects of different regulatory measures used to reduce excess volatility of stock-market returns, which is generated by investors trading on sentiment. The regulatory measures we study are the Tobin tax, shortsale constraints, and leverage constraints. The main contribution of our research is to evaluate these regulatory measures within the same dynamic, stochastic general equilibrium model of a production economy, so that one can compare both the direct and indirect effects of the different measures on the financial and real sectors within the same economic setting. We find that of the three measures we consider, only the leverage constraint is effective in reducing stock-market volatility, and this is accompanied by positive effects on the real sector: an increase in the levels of consumption growth and investment growth, and a decrease in their volatilities. In contrast, both the Tobin tax and shortsale constraints increase volatility in financial markets, and have negative effects on the real sector: a decrease in the growth rates of output and investment and an increase in the volatility of consumption-growth.
Professor Bin Srinidhi
Title: “Family controlled firms and their effect on reporting and risk”
The talk will be based on two of Professor Srinidhi’s papers: The first one, which has been accepted for publication in the November issue of The Accounting Review, deals with how family ownership affects auditor choice and audit fees. More generally, the talk will focus on how family control affects earnings quality and the reporting incentives.
The second one is a working paper that deals with family firms and crash risk.