NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Kyriakos T. Chousakos

Bank of America
One Bryant Park
NY1-100-05-00
New York, NY 10035

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Institutional Affiliation: Bank of America

NBER Working Papers and Publications

May 2020The Macroprudential Role of Stock Markets
with Gary B. Gorton, Guillermo Ordoñez: w27113
A financial crisis is an event of sudden information acquisition about the collateral backing short-term debt in credit markets. When investors see a financial crisis coming, however, they react by more intensively acquiring information about firms in stock markets, revealing those that are weaker, which as a consequence end up cut off from credit. This cleansing effect of stock markets’ information on credit markets’ composition discourage information acquisition about the collateral of the firms remaining in credit markets, slowing down credit growth and potentially preventing a crisis. Production of information in stock markets, then, acts as a macroprudential tool in the economy.
February 2017Bank Health Post-Crisis
with Gary B. Gorton: w23167
Economic growth is persistently low following a financial crisis, possibly because of a continuing weal banking system. In a financial crisis bank health is significantly damaged. Post-crisis regulatory changes have aimed at restoring bank health, but measuring bank health by Tobin's Q, we find that the ill health of banks in the recent U.S. financial crisis and the Euro crisis has persisted, especially compared to other crises in advanced economies. The low Q's cannot be explained by the state of the macro-economy. The results seem to suggest that bank regulatory changes may be repressive.
 
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