Myeloid cells expressing VEGF and arginase-1 following uptake of damaged retinal pigment epithelium suggests potential mechanism that drives the onset of choroidal angiogenesis in mice

Whilst data recognise both myeloid cell accumulation during choroidal neovascularisation (CNV) as well as complement activation, none of the data has presented a clear explanation for the angiogenic drive that promotes pathological angiogenesis. One possibility that is a pre-eminent drive is a specific and early conditioning and activation of the myeloid cell infiltrate. Using a laser-induced CNV murine model, we have identified that disruption of retinal pigment epithelium (RPE) and Bruch's membrane resulted in an early recruitment of macrophages derived from monocytes and microglia, prior to angiogenesis and contemporaneous with lesional complement activation. Early recruited CD11b(+) cells expressed a definitive gene signature of selective inflammatory mediators particularly a pronounced Arg-1 expression. Accumulating macrophages from retina and peripheral blood were activated at the site of injury, displaying enhanced VEGF expression, and notably prior to exaggerated VEGF expression from RPE, or earliest stages of angiogenesis. All of these initial events, including distinct VEGF (+) Arg-1(+) myeloid cells, subsided when CNV was established and at the time RPE-VEGF expression was maximal. Depletion of inflammatory CCR2-positive monocytes confirmed origin of infiltrating monocyte Arg-1 expression, as following depletion Arg-1 signal was lost and CNV suppressed. Furthermore, our in vitro data supported a myeloid cell uptake of damaged RPE or its derivatives as a mechanism generating VEGF (+) Arg-1(+) phenotype in vivo. Our results reveal a potential early driver initiating angiogenesis via myeloid-derived VEGF drive following uptake of damaged RPE and deliver an explanation of why CNV develops during any of the stages of macular degeneration and can be explored further for therapeutic gain

Banking with nominal deposits and inside money

Bank runs in the literature take the form of withdrawals of demand deposits payable in real goods, which deplete a fixed reserve of goods in the banking system. That framework describes traditional bank runs based on currency withdrawals as occurred historically in the US and more recently in developing countries. However, in a modern banking system, large withdrawals typically take the form of electronic payments of inside money, with no analog of a depletion of a scarce reserve from the banking system. In a new framework of nominal demand deposits repayable in inside money, pure liquidity-driven bank runs do not occur. If there were excessive early withdrawals, nominal deposits would hedge the bank and flexible monetary prices in the goods market would limit real consumption. The maturity mismatch of short term liabilities and long term assets is not sufficient for multiple equilibria bank runs without other frictions. A key role of the bank is to ensure optimal real liquidity, which allows markets to optimally distribute consumption goods through the price mechanism.Bank runs Inside money Nominal contracts Demand deposits

Vesting and control in venture capital contracts

Vesting of equity payments to an entrepreneur, which is a form of time-contingent compensation, is very common in venture capital contracts. Empirical research suggests that vesting is used to help overcome asymmetric information and agency problems. We show in a theoretical model that vesting equity to an entrepreneur over a long period of time acts as a screening device against a bad entrepreneur type. But incomplete contracts due to hold-up by the venture capitalist imply that equity compensation, in the form of either short-term or long-term vesting, cannot provide standard contractible equity incentives for the entrepreneur to take an unobservable action involving effort. We introduce a new model of effort based on a verifiable choice of an effort-intensive project, for which the short-term vesting of equity can provide incentives, but which results in a trade-off between incentives and screening. Contingent control rights are a substitute for short-term vesting and provide the largest incentives for effort by fully protecting the entrepreneur from hold-up. We also show that a new link between equity cash flow claims and control rights is that residual equity control rights over the firm are necessary to protect residual equity claims from hold-up.Venture capital ; Corporations - Finance ; Financial risk management ; Equity

Money and Modern Bank Runs

Following Diamond and Dybvig (1983), bank runs in the literature take the form of withdrawals of demand deposits payable in real goods, which deplete a fixed reserve of goods in the banking system. This paper examines modern bank runs, in which withdrawals typically take the form of wire transfers by large depositors. These transfers shift balances among banks, with no analog of a depletion of a scarce reserve from the banking system. I show that with demand deposits payable in money using modern payment systems, panic runs do not occur if there is efficient lending among banks. Aggregate shocks also do not cause bank runs because nominal deposits allow consumption to adjust efficiently with prices. Currency withdrawals do not allow for traditional consumer runs unless all banks are subject to panics. However, if interbank lending breaks down, bank runs occur due to a coordination failure in which banks do not lend to a bank in need, and can lead to price deflation and contagion to other banks being run. Policy conclusions such as deposit insurance and suspension of convertibility that solve depositor-based runs, as in Diamond-Dybvig, are neither necessary nor sufficient to prevent interbank-based banking crises. Rather, central bank intervention as lender of last resort is necessary. The model corresponds to evidence of the banking crisis that required unprecedented Federal Reserve intervention following September 11, 2001bank runs, money, nominal contracts, interbank market, prices, contagion, lender of last resort, banking crisis

Information Management in Banking Crises

A regulator resolving a bank faces two audiences: depositors, who may run if they believe the regulator will not provide capital, and banks, which may take excess risk if they believe the regulator will provide capital. When the regulator's cost of injecting capital is private information, it manages expectations by using costly signals: (i) A regulator with a low cost of injecting capital may forbear on bad banks to signal toughness and reduce risk taking, and (ii) A regulator with a high cost of injecting capital may bail out bad banks to increase confidence and prevent runs. Regulators perform more informative stress tests when the market is pessimistic