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We show that larger trades incur lower trading costs in government bond markets ("size discount"), but costs increase in trade size after controlling for client identity ("size penalty"). The size discount is driven by the cross-client variation of larger traders obtaining better prices, consistent with theories of trading with imperfect competition. The size penalty, driven by the within-client variation, is larger for corporate bonds, during major macroeconomic surprises and during COVID-19. These differences are larger among more sophisticated clients, consistent with information-based theories. [ABSTRACT FROM AUTHOR]

We study the effect of credit default swaps (CDSs) on the bond market. Using a comprehensive sample of U.S. corporate bonds, we document that the presence of CDSs significantly increases bond liquidity and reduces yield spreads for investment grade bonds. We show that CDSs influence the bond market by lowering the impact of fire sales of institutional bondholders and facilitating inventory management for bond dealers who absorb fire sale shocks. However, the liquidity provision role of CDSs gets weakened after the CDS Big Bang in 2009, potentially because of the requirement of large upfront payments. [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]

Municipal bond markets began pricing sea-level rise (SLR) exposure risk in 2013, coinciding with upward revisions to worst-case SLR projections and accompanying uncertainty around these projections. The effect is larger for long-maturity bonds and not solely driven by near-term flood risk. We use a structural model of credit risk to quantify the implied economic impact and distinguish between the effects of underlying asset values and of uncertainty. The SLR exposure premium exhibits a trend different from house prices and is unaffected by house price controls. Together, our results highlight the importance of climate uncertainty in driving municipal bond prices. Authors have furnished an Internet Appendix , which is available on the Oxford University Press Web site next to the link to the final published paper online [ABSTRACT FROM AUTHOR]

A correction is presented to the article "The Macroeconomic Uncertainty Premium in the Corporate Bond Market" which appeared in the August 2021 issue.

We estimate a series of Threshold Vector Autoregression models to examine the nonlinear nature of interactions among housing market condition, output growth, credit market condition, monetary policy, and inflation across different housing market regimes. We find that the effects of housing, output, monetary, and credit shocks are highly regime-dependent, both qualitatively and quantitatively. Almost all shocks have larger impacts when the housing market is in the distress regime than normal regime. Furthermore, we find that the asymmetrical effects of shocks are the most prominent when the housing market moves in and out of the distress regime. However, once the housing market is in the normal regime, the asymmetry becomes economically insignificant when the housing market condition crosses between moderate and booming growth phases. [ABSTRACT FROM AUTHOR]

A timely and well-managed phase-out of bank lending to the fossil fuel sector is critical if Paris climate targets are to remain within reach. Using a systems lens to explore over $7 trillion of syndicated fossil fuel debt, we show that syndicated debt markets are resilient to uncoordinated phase-out scenarios without regulatory limits on banks' fossil fuel lending. However, with regulation in place, a tipping point emerges as banks sequentially exit the sector and phase-out becomes efficient. The timing of this tipping point depends critically on the stringency of regulatory rules. It is reached sooner in scenarios where systemically important banks lead the phase-out and is delayed without regional coordination, particularly between US, Canadian and Japanese banks. Rickman and colleagues explore scenarios for phasing out lending to fossil fuel firms. They analyse over $7 trillion of fossil fuel debt and show that financial regulation and international co-operation will be critical for a timely and just phase-out of fossil fuel finance. [ABSTRACT FROM AUTHOR]

This article analyses the American Express travel board game Money Card (1972) as it highlights the intertwinement between the rise of a distinctive form of tourism as a modern mass industry and the expansion of the capitalist market, the primacy of the dollar, and U.S. hegemony. In a period marked by a shift from paper money to credit cards and global credit markets, American Express was the most powerful and easily identifiable symbol of the new post-war international economic order dominated by U.S. economic and political power. Placing the American Express Money Card board game within the shift from the post-war economy of reconstruction to credit expansion and neoliberalism, brings to the forefront the ways in which the game presented tourism as a ritual in celebration of capitalism. As a form of armchair travel, the board game sold tourism as a re-enchantment of the world. The article explores how the board game framed the American Express Card as fetish object, portrayed Europe as up for sale, and created a desire for the services of American Express and consumerism more generally. It shows how players were trained to use credit cards, be good consumers, and participate in the economy of the tourist industry. By advancing a capitalist tourist dreamworld, Money Card shaped perceptions of travel to Europe and created a religious illusion, offering a re-enchantment of the world through tourism and credit cards. [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]

This paper examines nonlinear and time‐varying dependence structures between a pair of stochastic variables, using a novel approach which combines regime‐switching models and local Gaussian correlation (LGC). We propose an LGC‐based bootstrap test for examining whether the dependence structure between two variables is equal across different regimes. We examine this test in a Monte Carlo study, where it shows good level and power properties. We argue that this approach is more intuitive than competing approaches, typically combining regime‐switching models with copula theory. Furthermore, LGC is a semi‐parametric approach, hence avoids any parametric specification of the dependence structure. We illustrate our approach using financial returns from the US–UK stock markets and the US stock and government bond markets, and provide detailed insight into their dependence structures. [ABSTRACT FROM AUTHOR]

Purpose: To investigate the role of domestic and foreign economic policy uncertainty (EPU) in driving the corporate bond yields in emerging markets. Design/methodology/approach: The study utilizes monthly data from January 2008 to June 2023 from the selected emerging economies. The data analysis is conducted using univariate, bivariate and multivariate statistical techniques. The study includes bond market liquidity and global volatility (VIX) as control variables. Findings: Domestic EPU has a significant role in driving corporate bond yields in these markets. The study finds weak evidence to support the role of the USA EPU in influencing corporate bond yields in emerging economies. Domestic EPU holds more weight and influence than the EPU originating from the United States of America. Research limitations/implications: The findings provide useful insights to policymakers about the potential impact of policy uncertainty on corporate bond yields and enable them to make informed decisions regarding economic policies that maintains financial stability. Understanding the relationship between EPU and corporate bond yields enables investors to optimize their investment decisions in emerging market economies, opens the scope for further research on the interaction between EPU and volatility and other attributes of fixed income markets. Originality/value: Focuses specifically on the emerging market economies in Asia, providing an in-depth analysis of the dynamics and challenges faced by these countries, Explores the influence of both domestic and the USA EPU on corporate bond yields in emerging markets, offering valuable insights into the transmission channels and impact of EPU from various sources. [ABSTRACT FROM AUTHOR]

Understanding the impact of local government debt expansion on microeconomic entities is crucial in evaluating local government debt policies. This study explored the crowding-out effect of local government debt on firms' commercial credit financing. We found that local government debt plays a crucial role in enhancing corporate commercial credit financing by exacerbating the financing constraints faced by firms. Second, the impact of local government debt on commercial credit financing is more pronounced for firms with lower leverage and a more stable capital chain. Third, state-owned enterprises (SOEs) are more susceptible to the impact of local government debt on commercial credit financing compared to private enterprises. And the crowding-out effect of local government debt on firms' commercial credit financing is more pronounced in the regions where the credit market regulation is relatively weaker. Our findings provide valuable insights that can contribute to the reform of the local government debt management system. [ABSTRACT FROM AUTHOR]

If sovereign immunity waivers and clauses calling for litigation abroad reduce the risk of expropriation, bonds governed by foreign law should, ceteris paribus, trade at a premium compared to bonds issued under domestic law. In 2020, Argentina exchanged a panoply of bonds with different currencies, maturity and coupon structure for pairs of bonds that are identical except for their governing law. We leverage these "twin" bonds to identify the effect of legal jurisdiction on sovereign debt prices. Our findings indicate that foreign‐law bonds consistently trade at higher prices and are primarily held by long‐term investors. These results suggest that market participants price certain legal terms (e.g., governing law) in sovereign debt, and investors expect to face less credit risk under bonds governed by foreign law, either due to a lower risk of selective default or higher recovery rate in foreign courts. [ABSTRACT FROM AUTHOR]

This research incorporates crude oil price series with different time scales, China's dirty energy, new energy and green bond index into a system, so as to investigate the spillover effects during some major periods. The results indicate that the spillover effects of short-term oil price fluctuations are mild, and the green bond market is the least affected. While the long-term oil price fluctuations have profound effects on the aforementioned three markets, the spillovers are especially enhanced by extreme events. Our results are verified by appropriate robustness tests. [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]

We provide evidence that for advanced economies' sovereign bond markets in recent decades, both sides of the government balance sheet matter: for explaining government borrowing cost empirically, (i) government assets are significant in addition to government liabilities, and (ii) it is government net worth (total financial and non‐financial assets less liabilities) rather than government liabilities that matters when both are included. The central country‐specific fiscal factor driving sovereign bond yields thus appears to be government net worth. The focus of policy and academic debates though has tended to be narrowly on government debt, even as government net worth has declined substantially in many OECD countries in recent decades. [ABSTRACT FROM AUTHOR]

Investment in and allocating investment resources to business activities is done through the financial market and the banking credit market is part of this market. The most role of banks in the financial market is to give credit to customers. In this matter the capital adequacy assessment and credit risk are important and their control is considered as one of the key effective factors in bank operation and plays a major role in banks and financial institutes’ stability. So, the aim is to determine the effect of macroeconomic variables (GDP, liquidity, inflation rate and exchange rate) on Capital adequacy, liquidity risk and credit risk. The results showed that macroeconomic variables have a significant effect on banking risks. [ABSTRACT FROM AUTHOR]

We make a novel investigation of welfare costs associated with various suboptimal decisions made by retirees, both analytically and numerically. We utilize a unique framework that incorporates recursive utility with housing, and also encompasses expected utility and recursive utility without housing as special cases. Our findings indicate that under-investment in stocks incurs lower welfare costs compared to an equivalent over-investment. Suboptimal allocations in bond holdings result in higher costs than similar misallocations in stocks. Choosing not to participate in the stock market is less detrimental than avoiding the bond market. Should retirees opt to simplify their decision-making by investing solely in one type of asset, it is less costly for them to invest exclusively in bonds. Overconsumption of housing is less costly than an equivalent underconsumption. Suboptimal consumption imposes the highest welfare cost. Decisions regarding consumption, housing, and savings are found to be more crucial than the choice of how to distribute liquid savings between stocks and bonds. Additionally, recursive utility model better captures retirees' preference for bonds over stocks than expected utility model. Our results, which are consistent across various parameter settings, provide valuable insights for academics and policymakers aiming to enhance retiree welfare. [ABSTRACT FROM AUTHOR]

Biodiversity is in crisis globally, and we consistently fail to hit global targets to stem its loss. Inspired by the Kunming‐Montreal Global Biodiversity Framework, the biodiversity credit market offers an avenue for vital funding for biodiversity conservation projects around the world. Various biodiversity credit methodologies and standards are becoming available, and most will require the measurement and monitoring of biodiversity at scale. Private investment in conservation through biodiversity credits entails specific needs for biodiversity data collection, including the need for biodiversity claims to be verifiable. We conceptualise these requirements around ‘SAGED’ criteria: Scalable, Accessible, Granular (data of appropriate spatial, taxonomic and temporal resolution), Evidenceable and Directly measured (where possible). Measuring and monitoring biodiversity across ecosystems, ecoregions and taxa is expensive and time‐consuming with traditional survey methods. These methods often rely on access to experts with sufficient taxonomic and survey expertise, which is challenging in many parts of the world. Accordingly, we review biodiversity monitoring technologies and assess their readiness to fulfil key requirements of assessments for the purpose of nature accounting for biodiversity credits (particularly SAGED criteria). We focus on monitoring technologies that are commonly cited by biodiversity credit methodologies, including (e)DNA metabarcoding, passive acoustic monitoring and various other remote sensing methods. We also explore the current limits of these techniques in obtaining appropriate biodiversity measures and metrics for biodiversity finance. Synthesis and applications. Technological solutions for biodiversity monitoring are not (yet) a panacea but are key for evidenceable monitoring at scale. For current use in biocredit markets, we advise these are combined with ground validation and human‐collected ecological data. Developments in automation and machine learning will rapidly make these technologies more accessible and efficient. [ABSTRACT FROM AUTHOR]

• We assess the impact of herding/anti-herding on stock-bond correlations in the US. • We find that corporate bonds exhibit herding and stocks anti-herding. • Both these patterns dampen the correlation between US stocks and corporate bonds. • This effect is largely noise-driven in nature. • High uncertainty, optimism and economic outperformance strengthen this effect. We examine investors' herding/anti-herding behavior in the US stock and corporate bond markets and their impact on stock-bond return correlation. Corporate bonds exhibit herding, with stocks displaying anti-herding. Bond herding and stock anti-herding are weakly related, with each significantly dampening the stock-bond return correlation. This effect is largely driven by their irrational components, affecting mostly the correlation of noise-driven stock and bond return elements, more so during periods of elevated uncertainty, optimistic sentiment and excessively positive economic performance. As the irrational forces in each asset class (stocks; bonds) countervail each other, this implies greater stability and resilience for the financial system. [ABSTRACT FROM AUTHOR]

This article examines the changing nature of intermediation in the market for private credit. Intermediaries used the impersonal medium of newspaper advertisements to demonstrate the value of their role and their abilities in a credit market apparently still reliant on personal reputation and standing. They then sought to turn these initial, impersonal, transactional contacts into more personal, profitable relationships. While this use of advertisements suggests a move towards a market in which credit transactions were less personal, the realities of contact in the increasingly fragmented provision of private finance were more complex and social relationships remained important in intermediation. [ABSTRACT FROM AUTHOR]

To study the influences of the degree of interdepartmental collaborative supervision on the behavioral strategy selection of pig farmers, pig slaughterers, and pork processing manufacturers in the pork supply chain system, this study established a three-party evolutionary game model involving pig farmers, pig slaughterers, and pork processing manufacturers based on the social co-governance framework by focusing on the interdepartmental information sharing mechanism and cooperative governance. Here, we examined how the degree of collaborative supervision among government departments influences the behavioral strategy selection of these parties by focusing on key mechanisms such as information sharing and interdepartmental collaborative governance. Our findings revealed that within a social co-governance system, the strategic choices of the three entities in the pork supply chain closely correlate with the coordination level of collaborative supervision among government departments, particularly through information-sharing mechanisms. Additionally, the strategies are influenced by market-based contract supervision among entities, consumer reporting intensity, and the collaborative governance capabilities of the government, market actors, and consumers. Higher levels of social co-governance are associated with fewer risky links in the pork supply chain and reduced overall risk. Key factors affecting the behavioral strategy selection of the subjects in the pork supply chain include interdepartmental collaborative governance among government departments (e.g., optimizing random inspection frequencies, adjusting economic penalties, and disclosing enterprise market credit information via information sharing mechanisms), consumer complaint probabilities, and the intensity of mutual supervision among enterprises. Therefore, to enhance pork supply chain quality and mitigate risks, it is crucial to enhance the coordination of collaborative supervision among government departments, encourage consumer reporting, and improve market-based mutual supervision mechanisms among upstream and downstream subjects in the supply chain. [ABSTRACT FROM AUTHOR]

Using samples of corporate bonds issued by Chinese A-share firms from 2014 to 2021, we examine whether information about bond defaults transmits to other bonds underwritten by a common underwriter. We document that during the underwriting process for a new corporate bond, if any prior bonds underwritten by the same underwriter have defaulted, the yield spread of the new corporate bond increases significantly. Specifically, such a new bond, on average, has a yield spread that is 16.8 basis points higher than one without a common underwriter. The results suggest that investors perceive the default risk of a new bond increases due to a deteriorated reputation of the underwriter. Additional analyses suggest that the adverse effect of the new bond yield spread is less salient when an underwriter has a strong reputation, is state-owned, or has foreign shareholding; the issuer is state-owned or dual listed overseas. Overall, default information in the bond market transmits through common underwriters. [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]

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]

We examine the uncertainty in households' expectations regarding macroeconomic outcomes, namely inflation and the rate of nationwide home price growth. We document that people extrapolate from the instability of their personal and local environment when assessing the future volatility of these macroeconomic variables. Consequently, there are within-person spillovers in subjective uncertainty regarding different economic outcomes. This extrapolative behavior is more pronounced among lower-numeracy individuals, and it persists throughout the business cycle. People with more uncertain macroeconomic expectations are more likely to engage in precautionary behaviors regarding consumption and equity market exposure and are more concerned about credit market access. This paper was accepted by David Simchi-Levi, finance. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2023.00820. [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 study conducted the econometric analysis to test the hedge and safe haven effects of Non-fungible Tokens (NFTs) on major traditional asset markets in the global financial system. We investigate the estimates of these effects in times of extreme market conditions and the COVID-19 crisis. Our empirical results show evidence of the hedge and safe haven properties of NFTs, confirming two main findings: (i) NFTs act as a hedge and safe haven for particular stock markets and oil, bond, and USD indices, even though the degree of effects varies across asset classes; and (ii) NFTs also serve as sheltering facilities for the markets mentioned above, with more substantial safe haven benefits for bond and USD indices during the recent pandemic crisis. [ABSTRACT FROM AUTHOR]

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The present study explores the factors driving borrowers' preference for formal banks, self-help groups (SHGs) and moneylenders. The study is based on a systematic survey of 839 rural borrowers from southern India, sampled from four districts with varied levels of credit access (surplus, constrained and moderate credit). The data was analysed using multinomial logistic regression in SPSS. Results show how banks and moneylenders exclude borrowers based on relative wealth and gender. SHGs service women borrowers but are preferred more by wealthier borrowers, highlighting intragroup inequalities. Yet, the three lenders service a variety of purposes, justifying their demand in the market. The study enhances understanding of rural borrowers' constraints concerning various credit sources. The implications of this study are as follows: one is identifying the lacunae in the formal banking system, which policy amendments could address. Two, the study recommends an investigation of intragroup inequalities within SHGs. Third, the study underscores the demand for multiple players in the rural credit markets and their contribution to the borrower's credit needs. [ABSTRACT FROM AUTHOR]

South Korea's state-guaranteed bond market was nearly half the size of its sovereign bond market in 2022, and in the early 2000s, it was nearly twice the size of the latter. What explains the overwhelming prominence of this fixed-income market? This paper finds that the prominence of this market is a path-dependent consequence of developmental legacies and the Asian Financial Crisis. State-guaranteed bonds allowed the state to circumvent conditionalities that limited the state's ability to access domestic savings for policy objectives and helped shield the newly established sovereign bond market from premature supply pressure. This finding demonstrates that the state not only supports or creates markets but also uses markets to maintain its influence against external pressure. It also explains how the South Korean state was able to maintain its developmental policies after market liberalisation by tracking the post-crisis flow of domestic savings. [ABSTRACT FROM AUTHOR]

Until 29 December 2023 new miles on non-performing loans * PLs) and distressed debt trades had to be introduced into the local laws of all Member States of the EU. Such new rules establish new procedures for the servicing and collection of NPLs and distressed debt acquired after 29 December 2023 as well as new obligations for sellers and purchasers of NPLs and distressed debt, irrespective of whether the purchasers are resident in the EU. the UK, the US or elsewhere in the world. Purchasers of NPLs and distressed debt now need to appoint a licensed credit servicing institution for the acquired portfolios. Such new EU rules have been implemented in Germany through the German Secondary Credit Markets Act *reditzweitmarktgesetz) which came intoforce on 30 December 2023. [ABSTRACT FROM AUTHOR]

Green bonds have become a vital financial instrument to promote green development globally in the face of various environmental challenges. This paper investigates the impact of China's A-share listed companies' green bond issuance on ESG performance and the potential mechanisms from 2011–2021, using propensity score matching and double difference method (PSM-DID). The study finds that green bonds improve corporate ESG performance by enhancing environmental information disclosure, encouraging green innovation, and improving green reputation. Moreover, heavily polluting industries benefit more from green bond issuance in terms of ESG performance improvement. These findings contribute to understanding the benefits of green bond market in developing countries. [ABSTRACT FROM AUTHOR]

In this paper, we study the impact of the New Market Tax Credit (NMTC) program in the United States on overall jobs and jobs held by minority and rural populations within the 2010–2019 period using a dynamic event‐study analysis. We also investigate if the jobs that can be attributed to the program stayed in program recipient neighborhoods or whether those jobs were occupied by non‐residents. The results show that there is clear evidence that the program increased overall workplace jobs and workplace jobs held by White and minority populations in the program recipient tracts. We also see that a larger share of workplace jobs due to the program went to minorities compared to the job shares held by various racial and ethnic groups at the beginning of the investment period. The results further show that even though the NMTC program increased the number of jobs available in a program recipient tract, the individuals who live outside that tract are holding many of the jobs created. The results also suggest that the program had a negative impact on jobs held by residents in nonmetropolitan tracts. [ABSTRACT FROM AUTHOR]

This study investigates the extreme connectedness network among Green bonds, stocks and commodities and its implications for portfolio diversification during the turbulent periods. To this end, we implement the novel QVAR methodology by Ando, Greenwood-Nimmo, and Shin to study the connectedness at the median, extreme lower, and extreme upper quantiles. The results reveal dynamic spillovers among markets. Interestingly, static spillover effects are stronger for the extreme upper and lower quantiles than for the intermediate quantiles. Commodities are the major net transmitters, whereas Shanghai Stock Exchange green bond is the net receiver of shocks in the system. These results are supported by the findings of portfolio management analyses, which suggest that Green bonds and gold could function as potential diversification assets, serving as safe havens, particularly for the stock and Brent markets. Our study provides valuable insights for investors aiming to optimize their hedging strategies, guiding risk management, and portfolio diversification. [ABSTRACT FROM AUTHOR]

This paper theoretically and empirically studies the interaction of search and application approval in credit markets. Risky borrowers internalize the probability that their application is rejected and behave as if they had high search costs. Thus, "overpayment" may be a poor proxy for consumer sophistication since it partly represents rational search in response to rejections. Contrary to standard search models, our model implies (1) endogenous adverse selection through the search and application approval process, (2) a possibly non‐monotone or non‐decreasing relationship between search and realized interest, default, and application approval rates, and (3) search costs estimated from transaction prices alone are biased. We find support for the model's predictions using a unique data set detailing search behavior of mortgage borrowers. Estimating the model, we find that screening is informative and search is costly. Counterfactual analyses reveal that tightening lending standards and discrimination through application rejection both increase equilibrium interest rates. This increase in realized interest rates is in part due to strategic complementarity in bank rate setting. [ABSTRACT FROM AUTHOR]

Against the backdrop of COVID-19, we study how the interactions of mutual funds and dealers introduce fragility to the municipal bond market and induce lasting market impacts. During the crisis, trading surges, whereas dealers' liquidity provision plunges for mutual-fund-held bonds, leading to greater price depressions in these bonds. Importantly, the crisis reshapes the market's perceptions of mutual fund fragility risks, with the aftermath-yield spreads widening significantly more for bonds with greater mutual fund exposures. Such postcrisis pricing effects reflect dealers' continued reluctance to provide liquidity for mutual fund–held bonds, and they are stronger for bonds whose mutual fund holders are more susceptible to investor runs. This paper was accepted by Victoria Ivashina, finance. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2023.4912. [ABSTRACT FROM AUTHOR]

Credit markets and property rights are fundamental for modern economies, but their implications for the commons are unknown. Using a dynamic model of competitive resource extraction, we show that improving property right security unambiguously increases conservation incentives, but the effect of credit markets on resource extraction effort hinges on the security of property rights. We test these predictions using data on global fisheries, credit markets, and the largest ever marine property rights assignment. We find that property right security reduces resource extraction and that credit market development increases resource extraction under insecure property rights but reduces resource extraction under secure property rights. [ABSTRACT FROM AUTHOR]

Budget forecasts have become increasingly important as a tool of fiscal management to influence expectations of bond markets and the public at large. Difficulties in projecting macroeconomic variables in volatile economic times--together with political bias--thwart the accuracy of budget forecasts. Pooling information from many different forecasters can still lead to substantial gains in predictive accuracy when taking into account time variation. We combine the forecasts of both private and public agencies for Italy over the period 1993-2022, and test absolute and relative forecasting performance over time. Although forecast combinations do not necessarily result in less biased or more efficient forecasts, tracking better performing forecasters and combining their budget predictions produces significantly better predictions. [ABSTRACT FROM AUTHOR]

This study examines the effects of joining the European Monetary Union (EMU) using propensity score matching to address self‐selection bias. Findings indicate that EMU membership leads to reduced volatility in inflation, output growth, and bond yields. However, it also reveals fiscal deterioration in member states during the pre‐financial crisis period, even excluding Greece, Ireland, Portugal, and Spain. These countries experienced favorable bond market conditions pre‐crisis. The study underscores varying EMU effectiveness across different periods and countries, emphasizing the importance for policymakers to consider these variations when adopting EMU strategies. [ABSTRACT FROM AUTHOR]

Leveraging the availability of a large panel of signed trade data in the corporate bond market, we explore how machine learning methods can be used to improve upon standard trade direction classification methods in markets in general, both with and without pre-trade transparency. Using the signed data set allows us to show how both the trading and information environment at the time of the trade critically affect the accuracy of existing trade classification rules in general and also illustrate the importance of optimizing the feature set in correctly classifying trade direction. These insights extend to the equity market. [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]

This paper focuses on the sovereign crisis of the Euro debt crisis era, and we address the existence of the relationship of CDS and bond markets sovereign credit risk pricing for selected core and periphery EMU countries, during and after the 2009 EMU crisis. We study this relationship in conjunction to geopolitical risk as a measure of macroeconomic uncertainty. We use daily observations for several bond maturities and CDS premium with reference to the core (France and Germany) versus periphery EMU countries (Portugal, Italy, Ireland Spain, and Greece) for the period 2009 to 2014. To measure global geopolitical risk, we employ the Caldara and Iacoviello (2022) global geopolitics index (GPR). Using alternative econometric approaches, we find adequate evidence of volatility spillovers between the geopolitical risk index and sovereign risk markets mainly during the crisis period (2009–2012) and weaker during the easing of the eurozone debt crisis period (2012–2014). Moreover, based on Granger causality the estimation of the short‐ term dynamics reveals a significant linkage during the post‐crisis period rather than during crisis. During the crisis period, we found significant dynamic responses between GPR and bond yields. [ABSTRACT FROM AUTHOR]

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This study investigates the impact of macroeconomic shocks to firm investment opportunities on firm debt contracting policy. We find that adverse shocks to investment opportunities lead to a significant reduction in the use of debt covenants in syndicated bank loans. Consistent with incomplete contract theory, we show that firms mitigate debt–equity conflicts arising out of investment opportunities by employing accounting‐based financial covenants rather than non‐accounting‐based prepayment covenants. Adverse shocks to investment opportunities also lead to a concomitant decrease in the cost of borrowing. We find consistent evidence for corporate bond covenants and bond market borrowing costs as well. Overall, this study resolves prior mixed evidence concerning the impact of investment opportunities on debt contracting and connects macroeconomic theory with the accounting literature on debt contracting. [ABSTRACT FROM AUTHOR]

The questions on long-term planning of an enterprise’ bonded loan interest rate payments have been studied. The methods have been considered and the classification of methods for planning the bonds interest rate proposed. Several groups of such planning methods have been singled out. The analysis of application of bond interest rate planning methods applied by enterprises of different national industries has been made. The analysis has been carried out in the spheres of mechanical engineering, generation, transmission and sales of electric power, ferrous metals production, transportation and logistics, foodstuffs production, and information transmission provision. Corporate bond issues issued between 2015 and 2020 have been analyzed. As a result, the three methods most frequently used by enterprises in planning bond interest rates have been identified: methods of considering the macroeconomic risk of an organization; methods of considering the combination of macroeconomic and individual risk of an organization; methods based on market analysis. The study of the mentioned methods allowed us to propose a method of planning the bond interest rate, which calculates the weighted average of the forecast bond interest rate. To assess the quality of the proposed method, it has been tested. The article concludes that it can be used at enterprises planning to issue their own bonded loans.