Search

Economic theory predicts that bond insurance lowers issuers' financing costs by resolving asymmetric information and mitigating credit risk. With comprehensive data over the last 36 years, we find increasingly diminished empirical support for these models. The value of insurance in resolving asymmetric information beyond that resolved by credit ratings and other observable bond characteristics is economically minimal. The average gross value of insurance ranges from 4 to 14 bps when bond insurers offer Aaa-rated coverage. However, this gross value becomes insignificant after 2008 when Aaa-rated insurance no longer exists. Evidence suggests that the lack of insurance benefit in the postcrisis period is attributable to the deteriorated creditworthiness of insurance companies. Examining noninterest saving explanations for the continued use of insurance in the no-Aaa insurance market, we find evidence that issuers purchase insurance out of habit (with insurance value most diminished for habitual purchasers with low governance quality) and for the convenience it affords in default, but no evidence that insurance improves secondary market liquidity. This paper was accepted by Gustavo Manso, finance. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2023.4813. [ABSTRACT FROM AUTHOR]

We investigate the effects of opioid abuse on municipal finance. We employ instrumental variables, border discontinuity difference-in-differences regressions, and coarsened exact matching to identify consistent causal effects, while controlling for variation in economic conditions and demographics. Opioid abuse lowers credit ratings, increases new offer yields, and reduces bond issuance. Reversal of these effects following effective antiopioid legislation further supports causality. Differential effects due to investor heterogeneity suggest that opioid abuse affects municipal finance through a capital supply channel. Overall, we conclude that local opioid abuse impedes municipalities' access to capital and thus hurts their ability to provide public services and infrastructure. [ABSTRACT FROM AUTHOR]

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jfineco.2006.10.001 Byline: Sohnke M. Bartram (a), Gregory W. Brown (b), John E. Hund (c) Keywords: Systemic risk; Default risk; Credit risk; Banks; Exposure; Emerging markets Abstract: This paper develops three distinct methods to quantify the risk of a systemic failure in the global banking system. We examine a sample of 334 banks (representing 80% of global bank equity) in 28 countries around five global financial crises. Our results suggest statistically significant, but economically small, increases in systemic risk. Although policy responses are endogenous, the low estimated probabilities suggest that the distress of central bankers, regulators and politicians about the events we study could be overstated and that current policy responses to financial crises could be adequate to handle major macroeconomic events. Author Affiliation: (a) Lancaster University, Management School, Lancaster, LA1 4YX, UK (b) Kenan-Flagler Business School, University of North Carolina at Chapel Hill, Chapel Hill, NC 27599-3490, USA (c) McCombs School of Business, University of Texas, Austin, TX 78712, USA Article History: Received 28 July 2005; Revised 11 July 2006; Accepted 17 October 2006 Article Note: (footnote) [star] We gratefully acknowledge research funding by the Center for Financial Research of the Federal Deposit Insurance Corporation (FDIC), Lancaster University, Lancaster University Management School, the Leverhulme Trust, and The Bank of America Faculty Development Fund, as well as support by Global Reports, Perfect Information, Fitch Ratings, and Thomson Financial in establishing the data set. We also thank Robert Bliss, Jean Dermine, Hans Degryse, Eva Gutierrez, Philipp Hartmann, Shelagh Heffernan, Jean Helwege, Armen Hovakimian, Donald Morgan, Roberto Rigobon, Anthony Saunders, Lynn Shibut, Christian Upper and Giuseppe Vulpes as well as seminar participants at the FDIC Summer Research Workshop, the Financial Intermediation Research Society (FIRS) conference in Capri, the 2005 American Finance Association annual meeting, the 2004 European Finance Association annual meeting, the 2004 Financial Management Association annual meeting, the Emerging Markets Group (EMG)/Economic and Social Research Council (ESRC) workshop 'International Diversification and Contagion' at Cass Business School, 2005 National Bureau of Economic Research (NBER) conference 'Risks of Financial Institutions,' NBER's 2005 Universities Research Conference 'Structural Changes in the Global Economy: Implications for Monetary Policy and Financial Regulation,' the Fourth Joint Central Bank Research Conference 'Risk Measurement and Systemic Risk', the 2005 Australasian Conference on Banking and Finance, Karlsruhe University, The Bank of England, Darden School of Business, Lancaster University, Temple University, University of North Carolina, University of Texas at Austin, Vanderbilt University, and Wake Forest University. Florian Bardong and Nishad Kapadia provided excellent research assistance.

The author argues that Immanuel Kant, in the 'Critique of Pure Reason,' deliberately avoided sociology for architectonic and structural reasons. The possibility that Kant may have considered a sociological edition of the Critique prior to his death is discussed.

Scholars who claim that Hegel's theories on social reality are a mere extension of Kant's idealism miss the fundamental distinctions between their philosophical approaches. While Kant used the supposedly scientific and objective approach in studying nature on his studies of human nature, Hegel recognized that reality is not bound by a single individual's conscious conception of truth. Hegel believes that study of human relations with each other is the key to the understanding of social reality.

The book 'The Construction of Social Reality' by John Searle is analyzed. Searle advocates the theory that self-reference is a puzzle or problem that can be solved. The solution will be to substitute institutional reality with physical reality and show the application of philosophical wisdom on physical reality. He also believes that institutional reality is made possible by language which itself is language-dependent.

This relatively slender and elegant volume contains an eighteen page bibliography with over 160 recent entries drawn eclectically from jurisprudence and the philosophy of language. Bix is modestly apologetic about [...]