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In this future directions in finance article, I discuss several topics that I believe are promising areas for research. The topics fall into three areas: the microstructure of fixed income markets, equity market microstructure, and short selling. Both theoretical and empirical work is needed in these areas. [ABSTRACT FROM AUTHOR]

What drives short-term credit spreads: credit risk, liquidity risk, or both? We investigate this issue using the structural approach to credit risk modeling and a novel data set of secondary market transaction prices for Chinese commercial papers (CPs). In particular, we propose and test a structural model with jump risk and exogenous market illiquidity under which the predicted yield spreads can be decomposed into a credit component and a liquidity component. We find that credit risk and, especially liquidity risk, are important determinants of short-term yield spreads. Our model-based decomposition results show that, on average, credit risk and market liquidity account for about 25% and 52% of CP yield spreads, respectively. For comparison, we also examine the drivers of the US CP yield spreads using security-level data. We find that credit risk accounts for a small fraction of the observed yield spreads but liquidity contributes a much greater proportion. [ABSTRACT FROM AUTHOR]

The paper "Corporate managers, price noise and the investment factor" investigates the impact of flows between the bond and equity funds on investment factors over the period 1984 to 2015. The paper "To jump or not to jump: momentum of jumps in crude oil price volatility prediction" finds a phenomenon, "momentum of jumps" (MoJ) and proposes a strategy that significantly outperforms the individual models and a series of competing strategies to enhance the predictability of crude oil price volatility. The paper "A theory of very short-time price change: security price drivers in times of high-frequency trading" analyzes and identifies four parameters considered to affect price changes. [Extracted from the article]

Green bonds, a new green financial instrument, encourage enterprises to achieve high-quality development through green technology innovation. However, a lack of research is currently being conducted into the effect of green bond issuance in China. Can green bonds effectively empower enterprises to green innovation? What is the underlying mechanism? In the context of carbon-neutral strategies, it is significant to answer these questions scientifically. This paper uses a quasi-natural experiment of the launch of the green bond market in China in 2016 to conduct empirical studies based on the panel data of 1 558 non-financial Chinese-listed enterprises from 2015 to 2020 with the multi-period difference-in-difference model. The results show that ① issuing green bonds can significantly empower enterprises' green technology innovation. The empowering effect is mainly for green utility patents rather than green invention patents. This result remains after dynamic heterogeneity analysis, placebo test, and other tests. In addition, the effect has a lag. ② Heterogeneity tests show that this empowerment effect varies across enterprises with different property rights, industries, and regions. ③ In terms of the mechanism of action, green bonds can enhance enterprises' ability to innovate green technology by increasing the proportion of long-term loans and improving their debt structure. This paper broadens the relevant literature on the economic consequences of green bonds and the influencing factors of enterprises' green technology innovation and provides policy suggestions for further improving the analysis of green bonds. [ABSTRACT FROM AUTHOR]

This paper's objective is to examine the asymmetric cointegration and asymmetric effects of financial development and monetary policy on monetary transmission mechanisms in the Nigerian context using annual data spanning the period from 1986 to 2023. This study pushes the frontiers of knowledge by providing information on the nonlinear impacts of monetary policy and financial sector innovations on monetary transmission mechanisms in Nigeria to help policymakers tailor their strategies to local conditions, enhancing the effectiveness of monetary interventions in the economy. To achieve this, this paper adopted nonlinear ARDL models to understand how changes in the direction of monetary policy and developments in the financial system induce changes in the transmission of monetary policy. The findings document the existence of asymmetries in both the short and long run, revealing that the impacts of financial development and monetary policy on the different monetary policy channels are not uniform. These asymmetries indicate that the responses of various economic variables to monetary policy actions differ depending on the level of financial development. These findings underscore the complexity of the monetary transmission mechanism and the necessity for a nuanced understanding of how financial development and monetary policy interact in different contexts. Consequently, this finding is symptomatic of some characteristics of those financial markets on their way toward advanced developments. As the financial system matures, monetary policy may have a greater impact on the cost of short-term funding for banks without having any discernible effect on the rates at which businesses and households access funding. Therefore, this paper recommends focusing on the policies that will foster the financial system across the banking sector, capital market, bond market, and overall financial sector to improve the efficiency of the monetary transmission process. [ABSTRACT FROM AUTHOR]

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The rapid development of supply chain finance (SCF) has significantly alleviated the financing difficulties of small and medium-sized enterprises (SMEs). However, it is important to recognize that within the accounts receivable financing segment of the SCF credit market, the credit risk associated with SMEs poses a serious challenge and potential threat to the stability, health, and sustainable development of the SCF system. This paper pays special attention to the stability of the two-party evolutionary game between SMEs and financial institutions (FIs) within the context of the Chinese SCF credit market. To identify a pathway to reduce credit risks for SMEs while simultaneously enhancing system stability, this paper adopts the stochastic evolutionary game (SEG) model and combines the fixed-point method to determine the conditions that satisfy the stability of the system's index p mean square of the system. This study has made attempts in various aspects, such as the innovative construction and investigation of a nonlinear SEG model, the endeavor to study the stability of SEG systems using fixed-point methods, and the innovative construction of a more realistic two-player SEG system. The data and simulation results generated from hypothetical scenarios show that the conclusions of the article are credible and feasible. Through the study, we conclude that the higher credit ratio from FI and the higher penalty intensity from core enterprises (CEs) will accelerate the stability of the system. Based on solid data and modeling analysis, insights into the regulation of FI are provided. [ABSTRACT FROM AUTHOR]

Over the past decade, debt-based solutions have been implemented as part of austerity policies to distribute public goods by the use of market forces, resulting in an increase in public and private indebtedness. This paper considers the terms of such solutions by developing the conceptual lens of market studies to rethink 'debt' and 'the market' as analytical categories that often reproduce the conditions of their conceptual boundaries. In so doing, it demonstrates how paying attention to particularities reveals the normative, economic and political circumstances that determine debt-based solutions. These do not simply sit peripheral to the market, but come to define debt obligations as part of market relations. In this respect, the paper takes an approach that accounts for obligation as an entanglement of debtors in market relations. The study builds on Michel Callon's rendition of 'problematization' to explore the implementation of the 2010 higher education fee loan regime in England, a result of austerity governance. A novel application of 'markets for collective concern' and 'accountability devices' is thus used to argue that understanding the ways debt-based solutions entangle market participants in the obligation to repay that reproduces the conditions of the intervention's conceptual boundaries, requires a market studies approach. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of the introduction of inflation-linked bonds, which incur transaction costs when traded, on the monetary economy with sunspots. This paper shows that there always exists a certain range of positive transaction costs, where both monetary and bond markets are active. This implies that on top of governments, profit-seeking financial entrepreneurs also have the incentive to issue these bonds. This paper also displays how financial innovation on the indexed bond can be Kaldor improving, even if not necessarily Pareto improving. This finding indicates that together with lump-sum tax policies, the government can attain consensus among consumers on bond issuance. [ABSTRACT FROM AUTHOR]

As a novel financial instrument, green bonds require further research to understand their causal effects and theoretical mechanisms on sustainable development fully. This paper constructs a theoretical model that characterizes the issuance of green bonds as the extent to which social planners prioritize environmental benefits in bond markets. In this model, we define sustainable development as the geometric mean of environmental factor inputs and final production output. By maximizing consumer utility, this model elucidates the direct and non-linear relationship between green bonds and sustainable development. The paper empirically investigates this proposition using data from 19 European countries between 2018 and 2022. The results indicate that: (1) Green bonds significantly promote sustainable development. This financial instrument, designed to raise funds for environmental projects, can indeed promote sustainable development through clean and green resource allocation. (2) The promotional effect of green bonds on sustainable development increases significantly with improvements in innovation efficiency, industrialization rates, and savings rates. This finding elaborates on the conditions under which the positive impact of green bonds on sustainable development is enhanced. (3) Green bonds only promote sustainable development when a country's factor endowment structure reaches a specific threshold. Beyond this threshold, as the factor endowment structure becomes very high, the country's sustainable development gains sufficient momentum, diminishing the role of green bonds. This finding suggests that the positive impact of green bonds on sustainable development is contingent upon certain properties reflecting the economic basis. [ABSTRACT FROM AUTHOR]

Overconfidence (hubris or overestimation of one's ability to perform) has been viewed in the finance literature as a character trait that is stable over time, e.g., assuming that if a manager is overconfident, he/she is overconfident all the time. In this paper, we aim to show that managerial overconfidence can be state-contingent, i.e., the level of managerial overconfidence could be influenced by an external economic shock such as the global financial crisis in 2008. A novelty of this paper is to provide evidence for and application of the concept of state-based managerial overconfidence, which is new in the finance literature. Two empirical studies were reported. In the first study (Study 1), we analyzed real market data by linear regression. We found that managerial overconfidence could vary according to changes in the state of the macroeconomy or tightening of corporate governance policies. In the second study (Study 2), we conducted a lab experiment simulating how external manipulations could alter participants' confidence level. Both our empirical studies provide strong evidence of state-contingent overconfidence by Student's t-test and contribute to the current finance literature, which assumes overconfidence as a personality trait. Our findings have important practical implications for the credit market. According to the state-contingent overconfidence hypothesis, creditors might reduce the loan amount or the loan duration (or other loan contract terms) too excessively by more than the efficient level during an economic downturn if the offsetting effect of state-contingent overconfidence is ignored. [ABSTRACT FROM AUTHOR]

Financial capital is currently being heralded for its potential to provide social and environmental transformations. This paper provides an in-depth case study of the Seychelles Blue Bond, highlighting the state's (fiscal and planning) capacities as central in mediating the future rents and value production when channelling thematic bond proceeds. Even as the Blue Bonds tapped into private capital markets and bond proceeds were intended to provide leverage for private businesses, this operation was contingent on complex economic and environmental planning by the state. Using literature on fictitious capital, rent and the role of the state in governing natural resources, this paper shows how the state needed to govern investment flows and its environmental conditions simultaneously in the case of the Seychelles Blue Bonds. By examining how the state tries to govern environments and finance in tandem, this paper contributes to geographical research on public fiscal policy, financialisation and environmental governance. [ABSTRACT FROM AUTHOR]

Purpose: This paper aims to explore the quantile-specific short- and long-term effects of economic policy uncertainty (EPU) on the efficiency of the green bond market. Design/methodology/approach: This study examines the long-term cointegration relationship and the short-term fluctuation relationship of EPU, WTI crude oil price (WTI) and European Union Allowances price (EUA) with the green bond market efficiency (GBE) using the quantile autoregressive distributed lag method. Additionally, the authors analyze the differences before and after the Covid-19 pandemic. Findings: EPU has a significant positive impact on the GBE before the outbreak. However, during the crisis period, the impact of EPU and WTI was greatly weakened, whereas the impact of EUA was strengthened. Practical implications: This paper demonstrates the dynamics of GBE and its influencing factors under different periods. The findings provide insights for market participants and policymakers to gain a clearer understanding of the green bond market. Originality/value: This paper extends the study of green bonds by quantifying the GBE and elucidating the nonlinear relationship between efficiency and independent variables at different quantiles over different periods. [ABSTRACT FROM AUTHOR]

Since the outbreak of the financial crisis in 2007, opinion has been divided over whether its root cause was weak regulation and bank funding problems or the pressure of investor demand for US safe assets. New research on the European banks' role in the crisis may finally help to resolve the issue. Far from being peripheral players in the crisis, European banks were deeply implicated in its causal origins as evidenced by their activities in the two US debt markets that were at the heart of the crisis: those for collateralised debt obligations (CDOs) and for asset backed commercial paper (ABCP). These activities would seem to lend weight to the conclusion that regulation and bank funding issues were the key causal variables in the financial crisis. However, it is a conclusion only made possible by ignoring the pre-crisis connection between the federal funds rate and the rate of ABCP demand from the institutional money market mutual funds (MMMFs). This paper argues that when this connection is closely examined, it turns out that the evidence surrounding the European banks' role in the financial crisis gives greater weight to the safe asset demand explanation of the crisis. [ABSTRACT FROM AUTHOR]

As highlighted by Pop & Georgescu (2024), the Romanian academic literature concerning municipal bonds is sparse, while the investigations regarding the factors that can influence the sub-sovereign bond trading at Bucharest Stock Exchange is quasi non-existent, to the best of authors’ knowledge. The present paper continues the work of Pop & Georgescu (2024) by trying to identify which of the public available information regarding various interest rates and Bucharest Stock Exchange (henceforth BVB) indices returns influence the trading activity of municipal bond market segment. The correlations presented within this paper imply that the modest profile of municipal bond segment at BVB is related to a relative small number of individual investors that dominate the transactions, using mostly observed data to decided when to trade and what to trade. The scarce correlations that appear in relation with the trading volume and trading value point toward the idea that only a small portion of the listed municipal bonds are owned by individual investors. [ABSTRACT FROM AUTHOR]

Purpose: This paper aims to examine the Canadian financial sector's reaction to opportunities and risks created by the green bond market in a low-carbon and climate-resilient (LCR) economy. Design/methodology/approach: The authors used a concurrent mixed methodological approach that undertakes an online survey and semistructured interviews with critical green bond market stakeholders. Findings: The most significant market driver in Canada is the reputational benefit for stakeholders, i.e. its ability to meet the high demand for sustainable finance and the marketing potential of its green credentials. The major market barriers are transactional costs, i.e. additional tracking required for reporting purposes, lack of market liquidity and identification of environmental impact or additionality. Canadian green bonds are also more likely to be evaluated on their green impact than their global market peers. Research limitations/implications: Limitations of this study include its focus on Canada, which may exclude or not apply to drivers and barriers in other green bond markets. Practical implications: The paper helps create an accounting-based conceptual framework for key motivations and barriers that affect financial decision-making regarding green bonds. Social implications: The authors identify economic and policy-related barriers and drivers for green bonds, addressing the financing gap for the LCR economy. Originality/value: To the best of the authors' knowledge, this study is the first to identify and compare Canadian green bond market drivers and barriers and to examine relevant stakeholder- and policy-related approaches that can be targeted to scale this market effectively. [ABSTRACT FROM AUTHOR]

This paper examines the dynamic linkages among economic policy uncertainty (EPU), the green bond market, the carbon market, and the macroeconomy using the time-varying parameter vector autoregressive (TVP-VAR) model with monthly data spanning from January 2016 to December 2021. Additionally, it assesses the robustness and accuracy of the empirical results through the Bayesian vector autoregressive (BVAR) model. The findings indicate that EPU negatively affects the green bond market in the short term but has a positive impact in the medium and long term. Conversely, EPU has a positive impact on the carbon market in the short term but a negative impact in the medium and long term. Furthermore, the green bond market negatively influences the carbon market in both the short and medium to long term. These results suggest that emerging markets, such as the green bond and carbon markets, are influenced by EPU. The adverse impact of the green bond market on the carbon market, however, contributes to expediting China's attainment of its low-carbon objectives. Appropriate economic policies can play a vital role in accelerating the transition to a low-carbon economy. The study also reveals that the US-China trade war has expedited the development of green capital markets in China, despite its impact on the green economic transition in the country. These findings provide insights for the government and investors to formulate suitable strategies for risk mitigation. [ABSTRACT FROM AUTHOR]

This paper estimates the impact of a program providing classroom and on-the-job entrepreneurship training followed by the provision of a loan to disadvantaged youth. We find that the program increases employment by seven percentage points and income by 21 per cent. The impact is larger for women than men. Furthermore, the results demonstrate an increase in the propensity to save by 17 percentage points with an increase in both the amount of loan taken and outstanding. Nevertheless, the effect of the training component of the program shows no statistically significant impact on income and hours worked. However, the additional impact of the loan component is notable, increasing hours worked as well as earnings. [ABSTRACT FROM AUTHOR]

This pair of papers examines and describes the state action necessary to make markets function as environmental policy instruments and as strategies of governance. We do this through a detailed look at the mechanics of environmental credit compliance markets in the US states of Oregon, Ohio, and North Carolina in which stream credits are privately created and sold to developers who have impacted protected stream systems. In this paper, we observe that the governance of streams as water resources requires the state to create a scalar hierarchy that fixes certain characteristics of streams at certain scales of state action. These fixes attempt to resolve, bracket, or ignore the temporal and spatial variability of streams that can confound governance; however, these variabilities are essential to the scientific study of streams. At each of the four distinct scales, four different operations crucial to market function were observed; at each scale, elements of natural variability were fixed or confined to be expressed only within the given scale. These observations reveal principles of how scale functions within environmental governance, as well as failures where gaps and resistances appear that create unforeseen outcomes in market-led policy. In three different state settings, the establishment of a fixed scale of governance is made in different ways that depend on the local institutional and social context. However, they all act to render an unruly set of temporal and spatial flows as instead occurring within certain fixed scalar boundaries, and thus amenable to governance with markets. [ABSTRACT FROM AUTHOR]

This paper describes the growth of local-currency bond markets in Emerging Asia and the institutional and policy challenges facing the region's economies for their further development. It presents an empirical analysis of the relationship between local-currency government bond (LCGB) market development and the components of financial development, using panel data for selected Emerging Asian economies. The analysis seeks to identify the key determinants for the development of LCGB markets. The results show that the depth of and access to both financial markets and financial institutions have a significantly positive impact on LCGB market development. Critical factors associated with local-currency bond market depth include macroeconomic variables, the exchange-rate regime, capital account openness and creditor rights. Based on these results, the paper offers policy directions for fostering the development of local-currency bond markets in the region. [ABSTRACT FROM AUTHOR]

As the green bond market expands, an increasing number of Green Bond External Reviewers (hereafter 'GBER' or 'GBERs') have gained momentum among investors and financial regulators. A GBER enhances the credibility of green bonds and prevents greenwashing risk in the green bond market by reducing the information asymmetry between issuers and investors. China is the second largest issuer of green bonds in the world. The current Chinese GBER legal framework is insufficient to ensure green bond market sustainability. Our purpose in this paper is to analyze the inadequacies of the Chinese GBER regulatory framework and to provide suggestions for overcoming the potential challenges within it. A textual analysis of primary legal sources and secondary academic sources serves as the main research methodology in this study. This paper provides an in-depth analysis of China's GBER regulatory framework and addresses its shortcomings and weaknesses. Furthermore, given the evolving stage of the Chinese green bond market, this paper analyzes potential challenges for GBERs and proposes some suggestions to ensure high-quality reviews by GBERs. [ABSTRACT FROM AUTHOR]

This paper examines if incorporating changes in financial market risk perception improves the predictive power of an early-warning system for systemic banking crises. In explaining systemic banking crises, the existing literature identifies inflating stock and real estate bubbles, credit booms, and surges in net capital inflows as the common drivers. Employing panel logit models to predict the postwar systemic banking crises in advanced economies to occur within three–four years, the paper's key finding is that, even after controlling for the effects of surges in asset and credit markets and net capital inflows that are above the long-run trends for an extended period, market participants' increasing underestimation of downside risks is a significant predictor of these crises. Incorporating changes in risk perception improves the prediction accuracy of the model significantly. This finding is robust across alternative prediction horizons, systemic crisis definitions, and risk-perception measures. Consistent with the recent theoretical developments in the form of the diagnostic expectations hypothesis for financial markets, the interpretation is that recent recurring good news about financial markets and the broader economic trends for sufficiently long periods lead to growing neglect of tail risks and riskier financial transactions, raising systemic risk and the likelihood of a financial crisis. The finding suggests monitoring financial market risk perception, in addition to the conventional indicators, to predict and avert systemic banking crises. [ABSTRACT FROM AUTHOR]

The process of global integration has accelerated, and the international financial market has become increasingly closely linked. The financial risks that come with them are becoming more complex and difficult to guard against. Multimedia modeling in Health Cloud biometric authentication and data management systems can be applied to the analysis of financial markets. Most of the current financial risk analysis models are based on a single time, and the models are relatively simple and cannot adapt to the current complex multidimensional mixed financial risk environment. Therefore, this paper aimed to analyze the spatial spillover effect of financial risk contagion based on the directed asymmetric (DAI) spatial econometric model. This paper proposed to transfer entropy information weight information and introduce the GARCH (generalized auto-regressive conditional heteroskedasticity) model to improve the traditional econometric model. By constructing a DAI measurement model, the spatial contagion of multidimensional mixed financial risks was analyzed, and on this basis, a generalized multidimensional economic space was established to analyze spatial spillover effects and analyze the specific path of spatial spillover effects. The model results in this paper showed that the degree of correlation between the stock and bond market varied greatly between countries. Among them, the change coefficient W s ⟶ b r s D of the event period was judged to have a large degree of negative change in the United Kingdom, Germany, and France in the European Union, which were −0.9885, −0.9876, and −0.9748, respectively. This showed that the model in this paper had a good and reliable ability to cope with the current multidimensional mixed complex financial risk environment and could be used as a reference for financial risk-related research. At the same time, it also proved that multimedia modeling in health cloud biometric authentication and data management system could provide a role in financial risk contagion analysis. [ABSTRACT FROM AUTHOR]

As the global economy transitions towards net zero, it is conjectured that efficient financial markets reflect the risks involved with this transition. This hypothesis is empirically tested in this paper and signals are found of climate transition risk pricing in options, equity and bond markets, based on greenhouse gas emission levels. The analysis of recent developments in the option market suggests that investors perceive the oil and gas sector to have an elevated risk profile. In the equity and bond market for, particularly, the energy sector, investors appear to demand higher returns to compensate for a higher transition risk. In addition, it is found that the average maturity of newly issued bonds in the carbon intensive coal sector decreased, while the average maturity increased strongly in the renewables sector with low carbon emissions. The reduction of investors' long-term exposure to the coal sector signals concerns about its long-term viability, while the opposite is the case for the renewables sector. Nonetheless, it is not possible to conclude that climate risk pricing is consistent, as the statistical evidence is not overwhelming and not fully aligned across different markets. Furthermore, as climate indicators and emission data still contain important flaws, climate pricing based on these indicators could also be inadequate. Therefore, this paper aligns with the literature arguing that climate risk pricing is inconsistent and inadequate and that this is important for investors and risk managers to acknowledge. In addition, policymakers are urged to ensure that transition information, like emission data, is correct, timely and comparable to ensure its information value and usability. [ABSTRACT FROM AUTHOR]

The green bond market has significantly improved in recent years thanks to the development of financial instruments and the rising climate change concerns. Given this backdrop, this paper investigates the effects of returns in different financial markets, i.e. the United States Treasury Bonds, the Standard & Poor's stock market, the United States Dollar, Gold, Crude Oil, and Bitcoin on the Green Bond returns (the Standard & Poor's Green Bond Index) from September 17, 2014, to September 1, 2022. The results from the robust linear and machine learning estimators indicate that the returns of the United States Treasury Bonds and the United States Dollar are negatively related to the Green Bond returns. Meanwhile, Gold returns positively affect Green Bond returns. The quantile regression estimations of Machado–Santos Silva also show that these findings are valid in different quantiles. The paper also discusses policy implications related to climate change and the development of financial instruments to promote green investments. [ABSTRACT FROM AUTHOR]

This paper merges three textual models to construct a series of indicators, which can yield more refined proxies for financial media coverage, to measure the impacts of COVID-19 on Chinese financial markets. Results show that the basic indicator Granger causes the volatilities of bond and stock markets and contributes more to the stock market after the outbreak of COVID-19. Next, four specific market-related indicators have significant effects on the corresponding financial market after the outbreak. Finally, the policy-related indicator has a significant effect on four financial markets after the outbreak, and it causes greater volatility in the stock market. This paper can help the government to stabilize the financial market by managing financial media attention. [ABSTRACT FROM AUTHOR]

Purpose: The paper aims to construct a theoretical framework to investigate whether the Shariah debt ratio screening in contemporary Shariah stock screening methodologies results in a bias towards a certain set of corporate financial behaviour for Shariah-compliant firms in the USA where access to a liquid Islamic debt market is non-existent. Design/methodology/approach: The paper extends the earnings valuation approach of Modigliani and Miller (1963) to theoretically asses the impacts of the 33% conventional debt limit on Shariah-compliant firms' corporate financial behaviour. Then, supporting evidence is shown via empirical stylised facts of samples of Shariah-compliant firms in the USA. Findings: A theoretical floor limit to investment cut-off rates is found for US Shariah-compliant firms so that lesser projects pass their internal rate of return versus conventional firms. Subsequently, such firms consistently show the following corporate financial characteristics: above-average size, larger marginal change in size and profitability in response to a given marginal change in investments, low book-to-market ratio and lower investment rates. Research limitations/implications: The findings of this paper may not hold where access to a liquid Islamic capital market is present. Practical implications: Caveat emptor. These findings may be inconsistent to the investor's risk preferences. Social implications: The findings suggests that Shariah-compliant firms are more conservative compared to their conventional counterparts. Originality/value: The paper is the first to introduce a theoretical framework to address consistent biasness in corporate financial behaviour due to the Shariah debt screening. It may prove useful for future academic studies as well as investment managers. [ABSTRACT FROM AUTHOR]

Market freezes are an interesting and theoretically challenging phenomenon —they are observed empirically, but cannot occur in standard models. This paper develops a formal theory of recurrent freezes emphasizing liquidity and self‐fulfilling prophecies. While it is well understood how to get hot and cold spells, where prices and quantities fluctuate, we get asset market freezes and thaws where trade completely stops and starts. The simplest specification gets this using negative asset returns. Other specifications use information frictions or fixed costs. We also consider credit freezes, analyze the extent to which the decentralized nature of trade matters, and discuss policy implications. [ABSTRACT FROM AUTHOR]

This paper analyses the impact of US monetary policy on external debt and credit growth in emerging market economies (EMEs) during the COVID-19 period. Using quarterly data from 13 EMEs and employing a panel autoregressive methodology, the study reveals the following key findings: First, global monetary policy plays a vital role in determining external debt and credit availability in EMEs during the COVID-19 period. Second, the global monetary expansion during the COVID-19 crisis led to the accumulation of external debt through the risk-taking channel of the exchange rate. Third, weak domestic monetary policy transmission hinders the stabilization of credit growth. The empirical findings suggest that the central bankers to choose an optimum policy mix to stabilize the economy during crisis. [ABSTRACT FROM AUTHOR]

This paper examines market and institutional ownership reactions to REIT security issuances. Specifically, we examine the short- and long-term market performance of issuing REITs compared to their non-issuing counterparts. We additionally examine changes in systematic and idiosyncratic risk curtailing from security issuances as well as institutional ownership shifts stemming from the sale of new securities. We find that equity issuances are met with negative market reaction in the event window, while there is no significant immediate market reaction to debt issuances. Buy-and-hold abnormal returns are generally higher for equity issuers in comparison to debt-issuing and non-issuing firms. We also find that equity issuances increase systematic risk exposure while both types of security issuances reduce idiosyncratic risk. Finally, we document that serial issuers of both equity and debt see increases in institutional investment following issuances. [ABSTRACT FROM AUTHOR]

Figure 1a. Economic Activity and Credit Market Sentimentin the U.S. Economic Activity Factor Figure 1b: Economic Activity and Credit Market Sentimentin the U.S. Credit Market Sentiment Factor Figure 1c: Economic Activity and Credit Market Sentimentin the U.S. Probability of an Adverse Economic State As shown in Figure 1a, the economic activity factorcaptures well the declines in economic activity duringrecessions, as well as the quick rebound from the recentCOVID crisis. Fluctuations inthe credit market sentiment factor are associated withstrong asymmetric and nonlinear effects on economicactivity, depending not only on the magnitude and sign ofa credit market sentiment shock but also on the currenteconomic conditions. Economic Brief In a forthcoming paper, we develop a newsignal-extraction statistical model to estimate a factorsummarizing conditions in U.S. credit markets. [Extracted from the article]

Different forms of social learning have been explored to act as complements to conventional extension services. This paper examines the possibility of using vocational training to high school students who in turn transfer information to their parents. We conduct a randomized control trial in nine communities in rural Nicaragua and evaluate changes in the knowledge of agricultural technologies, access to credit markets, and technology adoption for parents and students using a difference-in-difference approach. Our results show improvements in knowledge-based outcomes for students and parents, and increased access to credit markets and adoption of agricultural technologies by parents. Given the increase in schooling across developing countries, our results suggest that programs designed around within-family information diffusion can complement more conventional forms of agricultural extension. Little explored channels of information exchange can act as complements or substitutes of conventional extension models, where those are weak or non-existent. This paper is one of the first to explore and evaluate the teacher-student-parent of information exchange as an alternative for agricultural technology diffusion. [ABSTRACT FROM AUTHOR]

Innovation is a channel through which financial reform promotes economic growth. Drawing on the quasi-experiment of China's Financial Reform Pilot Zones, panel data from 293 prefecture-level cities in China from 2003 to 2019, and a difference-in-differences method, this paper evaluates the effect of financial reform on innovation. We find that financial reform significantly motivated innovation by promoting financial development, such as equity market development and credit market development. Moreover, the effect of financial reform on innovation shows diminishing marginal utility: in cities that started with a lower level of financial development, the policy effect on innovation is stronger. [ABSTRACT FROM AUTHOR]

Evidence suggests that sovereign debt markets are not featured by perfect competition but power dynamics are a key determinant of market outcomes such as ex-post returns on sovereign bonds. In such environment, coordination within each side of the market matters. With the purpose of influencing the international debt architecture, private creditors have historically been fairly coordinated and their interests more aligned ex-ante. Sovereign debtors, however, have not. The power asymmetry that that entails has equity and efficiency implications, both ex-ante and ex-post. This paper analyzes asymmetries in collective action of each side of the sovereign debt market and the mechanisms through which it affects market outcomes. It also analyses the Cartagena Group's experience in the 1980s as a prominent historical case of greater borrower coordination and identifies mechanisms through which greater debtor coordination could be fostered. [ABSTRACT FROM AUTHOR]

This study delves into the temporal dynamics within the equity market through the lens of bond traders. Recognizing that the riskless interest rate fluctuates over time, we leverage the Black-Derman-Toy model to trace its temporal evolution. To gain insights from a bond trader's perspective, we focus on a specific type of bond: the zero-coupon bond. This paper introduces a pricing algorithm for this bond and presents a formula that can be used to ascertain its real value. By constructing an equation that juxtaposes the theoretical value of a zero-coupon bond with its actual value, we can deduce the risk-neutral probability. It is noteworthy that the risk-neutral probability correlates with variables like the instantaneous mean return, instantaneous volatility, and inherent upturn probability in the equity market. Examining these relationships enables us to discern the temporal shifts in these parameters. Our findings suggest that the mean starts at a negative value, eventually plateauing at a consistent level. The volatility, on the other hand, initially has a minimal positive value, peaks swiftly, and then stabilizes. Lastly, the upturn probability is initially significantly high, plunges rapidly, and ultimately reaches equilibrium. [ABSTRACT FROM AUTHOR]

This pair of papers examines and describes the state action necessary to make markets function as environmental policy instruments and as strategies of governance. They do this through a detailed look at the mechanics of environmental credit compliance markets in the US states of Oregon, Ohio, and North Carolina in which stream credits are privately created and sold to developers who have impacted protected stream systems. In this paper, we examine the tools, techniques, and people involved in the creation of a value-bearing stream credit out of a physical stream or river site. These observations reveal important principles of how science functions within governance, as well as where gaps and resistances appear that create unforeseen outcomes in market-led policy. We examine the construction and use of instruments that define natural processes as objects with value; these techniques and tools include databases and spreadsheets, algorithms, and field scoring tools that have been scavenged from a wide range of scientific and governance practices and are not themselves inherently capitalist or developed for capitalist purposes. In three different state settings, the move from measure to value is made in different ways that depend on the local institutional and social context. However, they all act to render a network of interacting ecological forces as a field of discrete ecosystem objects amenable to governance with markets. [ABSTRACT FROM AUTHOR]

This paper analyzes the relation between country-specific high-frequency activity indicators and bond holdings in the portfolio of global investors. Based on positions from more than 20,000 investment funds, it finds that bond flows are significantly impacted by high-frequency activity levels and policy rates in emerging markets. Local "pull factors" have become important drivers of bond purchases. This effect of activity data—as captured by the Purchasing Managers' Indices (PMIs)—is stronger in the cases of India, China, Brazil and Indonesia as bond purchases in these markets appear to respond more to changes in activity survey responses. Overall, standardized coefficients indicate that an increase in a country's PMI reading has an effect on bond purchases that is on average as large as that of a decrease in a global risk metric or a reduction in US Treasury yields. That said, during episodes of bond outflows global factors dominate. [ABSTRACT FROM AUTHOR]

This paper studies the impact of the flooding of the Kosi river on the timing of marriage in the Indian state of Bihar, one of the world's poorest regions. Using a difference-in-differences design, we show that the Kosi floods reduced men's age at marriage by almost a year and women's age at marriage by over 4 months. The Kosi floods also decreased the secondary school completion rates of married men and women and married women's command over economic resources. We interpret these results within a framework of marriage markets, where in the absence of complete credit markets, marriage market payments (dowry) help smooth consumption in response to adverse income shocks. In support of this framework, we find that the impact of the Kosi floods is more pronounced among Hindus (for whom dowry is the traditional marriage payment norm) and among the landless (who are more credit-constrained). [ABSTRACT FROM AUTHOR]