Finance
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- June 2023
- Article
Why Is Dollar Debt Cheaper? Evidence from Peru
By: Bryan Gutiérrez, Victoria Ivashina and Juliana SalomaoIn emerging markets, a significant share of corporate loans are denominated in dollars. Using novel data that enables us to see currency and the cost of credit, in addition to several other transaction-level characteristics, we re-examine the reasons behind dollar credit popularity. We find that a dollar-denominated loan has an interest rate that is 2% lower per year than a loan in Peruvian Soles. Expectations of exchange rate movements do not explain this difference. We show that this interest rate differential for lending rates is closely matched by the differential in the deposit market. Our results suggest that the preference for dollar loans is rooted on the local household preference for dollar savings and a banking sector that is closely matching its foreign assets and liabilities. We find that borrower competitive pressure increases the pass-through of this differential.
- June 2023
- Article
Why Is Dollar Debt Cheaper? Evidence from Peru
By: Bryan Gutiérrez, Victoria Ivashina and Juliana SalomaoIn emerging markets, a significant share of corporate loans are denominated in dollars. Using novel data that enables us to see currency and the cost of credit, in addition to several other transaction-level characteristics, we re-examine the reasons behind dollar credit popularity. We find that a dollar-denominated loan has an interest rate that...
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- 2023
- Working Paper
Cryptocurrency Investing: Stimulus Checks and Inflation Expectations
By: Darren Aiello, Scott R. Baker, Tetyana Balyuk, Marco Di Maggio, Mark J. Johnson and Jason KotterWe provide a first look into the factors that affect retail investing in cryptocurrencies. We use consumer transaction data to examine how borrower characteristics, liquidity shocks, and hedging requirements shape crypto investment decisions of millions of U.S. individuals. We find that – similar to traditional investing – crypto investing responds to wealth, risk attitude, and liquidity constraints. Yet, crypto investing is more responsive than after-tax traditional investment flows to overall markets conditions. We then show that investors’ budget constraints affect crypto investing, in line with portfolio choice theories. We find that relaxing the budget constraint through receiving stimulus payments increases crypto investing. Tighter future budget due to higher expected inflation also increases crypto investing, consistent with hedging motives. Our findings are important for understanding this new high-risk, high-return asset class and designing effective regulations in this rapidly evolving space.
- 2023
- Working Paper
Cryptocurrency Investing: Stimulus Checks and Inflation Expectations
By: Darren Aiello, Scott R. Baker, Tetyana Balyuk, Marco Di Maggio, Mark J. Johnson and Jason KotterWe provide a first look into the factors that affect retail investing in cryptocurrencies. We use consumer transaction data to examine how borrower characteristics, liquidity shocks, and hedging requirements shape crypto investment decisions of millions of U.S. individuals. We find that – similar to traditional investing – crypto investing...
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- May 2023
- Article
Political Ideology and International Capital Allocation
By: Elisabeth Kempf, Mancy Luo, Larissa Schäfer and Margarita TsoutsouraDoes investors' political ideology shape international capital allocation? We provide evidence from two settings—syndicated corporate loans and equity mutual funds—to show ideological alignment with foreign governments affects the cross-border capital allocation by U.S. institutional investors. Ideological alignment on both economic and social issues plays a role. Our empirical strategy ensures direct economic effects of foreign elections or government ties between countries are not driving the result. Ideological distance between countries also explains variation in bilateral investment. Combined, our findings imply ideological alignment is an important, omitted factor in models of international capital allocation.
- May 2023
- Article
Political Ideology and International Capital Allocation
By: Elisabeth Kempf, Mancy Luo, Larissa Schäfer and Margarita TsoutsouraDoes investors' political ideology shape international capital allocation? We provide evidence from two settings—syndicated corporate loans and equity mutual funds—to show ideological alignment with foreign governments affects the cross-border capital allocation by U.S. institutional investors. Ideological alignment on both economic and social...
About the Unit
Our strategy is to assemble and nurture a faculty whose interests and skills complement each other, and who work well together:
a) to produce a broad range of finance-related research that is published in top-tier scientific and practitioner journals, and that addresses issues of present and future importance to managers (including regulators and policy makers);
b) to develop highly-relevant and intellectually rigorous MBA and executive education courses; and
c) to mentor future academics through the Business Economics doctoral program.
Our applied focus and access to business organizations are major advantages which are reinforced by our students and our case-based approach. We have a faculty with broad expertise, and we have resources, field contacts, and institutional support, all of which we can leverage to do richer work and be more productive than we could at other institutions.
Recent Publications
Why Is Dollar Debt Cheaper? Evidence from Peru
- June 2023 |
- Article |
- Journal of Financial Economics
Ava Labs: Navigating the Next Blockchain
- May 2023 |
- Teaching Note |
- Faculty Research
Cryptocurrency Investing: Stimulus Checks and Inflation Expectations
- 2023 |
- Working Paper |
- Faculty Research
Political Ideology and International Capital Allocation
- May 2023 |
- Article |
- Journal of Financial Economics
Project Helios: Harvesting the Sun
- April 2023 |
- Supplement |
- Faculty Research
Twitter: The Freedom to Speak Freely and Be Heard
- April 2023 |
- Case |
- Faculty Research
Sweet Teez Bakery: Projecting the Dough’s Rise Video Supplement
- April 2023 |
- Supplement |
- Faculty Research
Burning the Sails to Save the Ship: The Pilati Family Dilemma
- April 2023 |
- Case |
- Faculty Research
Harvard Business Publishing
Seminars & Conferences
There are no upcoming events.