The Invisible hand of the government” featured in AEA journals Research Highlight

European domestic banks were more likely to buy bonds issued by the governments when default looked imminent. What persuaded them? See

Panel discussion on the role of non-banks in the economy at ESRB Annual Conference.

At the fourth ESRB Annual Conference I discussed the link between demographic changes and non-bank activity in the mortgage market. I highlighted the role insurers can play unlocking cash when retirees are asset rich but cash poor.  See here my presentation

My paper “The Invisible Hand of the Government” accepted for American Economic Journal – Macroeconomics

My paper “The Invisible Hand of the Government: Moral Suasion during the European Sovereign Debt Crisis” written jointly with Steven Ongena and Alexander Popov has been accepted for the American Economic Journal – Macroeconomics. Using a novel two-layered identification strategy we provide evidence of moral suasion affecting government bond markets during the European sovereign debt crisis. During the height of the sovereign debt crisis, domestic banks were more likely than foreign banks to purchase domestic sovereign bonds during months in which the government needed to roll over a relatively large amount of maturing debt. Domestic banks that received government support, are small or with weaker balance sheets were particularly susceptible to moral suasion. Governance of banks played less of a role.

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Panel discussion on policy evaluation at the 2018 CEBRA Annual Meeting

At the 2018 CEBRA Annual Meeting the Deutsche Bundesbank and Financial Stability Board organized a high‐level panel on the evaluation of the G20 regulatory reforms. Together with Dietrich Domanski (FSB) and Joao Santos (NY Fed), I discussed the challenges and opportunities of policy evaluation. See here my presentation [link to ppt].

New working paper on the impact of the leverage ratio on repo market functioning

In my new working paper “Repo Market Functioning: The Role of Capital Regulation”, Antonis Kotidis and I show that a tightening of the leverage ratio in the UK reduced repo market liquidity, especially affecting smaller end users such as banks, insurers, pension funds and asset managers. We also show that other foreign dealers not affected by the tightening stepped into the market and gained market share, effectively benefitting from tighter UK regulation.