Newsletter

The Rodney White Center’s newsletter, A Bite of Finance, is designed to highlight some of the Finance Department’s current research in a way that is interesting, relevant, and comprehensible to both academic and general audiences. Each month the topics will range from current trends to customary themes relating to financial economics.

MAY  ISSUE

2022

THE RODNEY WHITE CENTER FOR FINANCIAL RESEARCH

A Bite Of Finance: The Latest From Wharton

FEATURE

Professor Jonathan Zandberg documents wide-ranging economic effects of access to abortion

Access to reproductive care affects women’s trade-offs between family and career. Better access reduces women’s risk of unintended pregnancy and improves their labor-market participation, either by sorting them into higher-paying jobs or into high-growth entrepreneurship. Ultimately, these findings foreshadow the future landscape of gender inequality in the United States if Roe is overturned.

ARTICLE

Professor Yao Zeng uncovers an active side to passive ETFs

Despite their passive image, ETFs are remarkably active in their portfolio management. They often use creation and redemption baskets that deviate substantially from the underlying index, and they adjust those baskets dynamically. If an ETF chooses to track its index more closely, the ETF is necessarily less liquid.

ARTICLE

Professor Urban Jermann studies the transition from LIBOR to SOFR

SOFR has recently replaced LIBOR as the main reference interest rate in the U.S. economy. This change exposes banks to new risks. Unlike SOFR, LIBOR increases relative to risk-free rates during financial crises, providing banks with extra income during times of large losses. If SOFR had been in place during the recent financial crisis, banks would have received up to $32 billion less in interest income.

ARTICLE

Professor Nick Roussanov helps resolve risk anomalies in stocks

Underperforming mutual funds buy high-risk stocks in hopes of “catching up” with peers. This behavior helps explain well-known risk anomalies in stock returns. The apparent overvaluation of stocks with high beta, idiosyncratic volatility, and skewness is concentrated in stocks predominantly held by laggard funds.

ARTICLE

Ph.D. student Dominik Supera shows how falling interest rates affect bank lending and corporate investment

The nominal short rate’s decline since the 1980s shifted banks’ funding mix from time deposits (CDs) to savings deposits. This shift led to a decline in business loans, firm investment, and new firm creation, and an increase in banks’ real estate lending.

Recent Past Issues

MARCH 2022

IN THIS ISSUE

In this issue: the link between volatility and liquidity; the unintended consequences of Quantitative Easing; why some households hold more stocks than others; how size matters in bond trading; and the effects of technological progress on rent-seeking.

JANUARY 2022

IN THIS ISSUE

In this issue: paying off the national debt, the effect of rising sea levels on muni bonds, gold’s value as an investment, the effects of capital controls on currency crises, and the environmental impacts of private equity.

NOVEMBER 2021

IN THIS ISSUE

Reassessing stock versus bond performance, synergies in FinTech lending, fracking’s long-term effects, the performance of ESG strategies, and PE investors’ effects on healthcare costs

SEPTEMBER 2021

IN THIS ISSUE

New findings on CEO stress, mutual fund flows, distressed stock returns, cash windfalls and entrepreneurship, information technology, and expectation errors

JULY 2021

IN THIS ISSUE

Professor Erik Gilje organized a Virtual Conference on Climate and Commodities that took place on April 23 and included a panel discussion with Professor Jeremy Siegel.

Research includes important studies on inflation risks for investors and the recent behavior of the Yuan;  a truly insightful new discussion on how government intervention can impact the renegotiation of private debts and help stop default waves across linked borrowers;  as well as a historical assessment of the role of banks in pre-WWI sovereign defaults.

MAY 2021

IN THIS ISSUE

Student loan forgiveness, decline in Entrepreneurship and collateralized debt obligations

 

MARCH 2021

IN THIS ISSUE

Social Security, bank debt, COVID -19 financial fragility, venture capitalists and more

JANUARY 2021

IN THIS ISSUE

COVID-19 bailouts, financing education and re-examining history

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