Unobservable savings, risk sharing and default in the financial system

In the present paper, I analyze how unobservable savings affect risk sharing and bankruptcy decisions in the financial system. I extend the Diamond and Dybvig (1983) model of financial intermediation to an environment with heterogeneous intermediaries, aggregate uncertainty and agents' hidden borrowing and lending. I demonstrate three results. First, unobservability imposes a burden on financial intermediaries, that in equilibrium are not able to offer a banking contract that balances insurance and incentive motivations. Second, unobservable markets do induce default, but only as long as insurance markets are incomplete. Therefore, their presence is not a rationale for government intervention on bankruptcy via "resolution regimes". Third, even in case of complete markets the competitive equilibrium is inefficient, and a simple tier-1 capital ratio similar to the one proposed in the Basel III Accord implements the efficient allocation.financial intermediation, hidden savings, bankruptcy, insurance, optimal regulation

Financial liberalization and contagion with unobservable savings

How do market-based channels for the provision of liquidity affect financial liberalization and contagion? In order to answer this question, I extend the Diamond and Dybvig (1983) model of financial intermediation to a two-country environment with unobservable markets for borrowing and lending and comparative advantages in the investment technologies. I demonstrate that the role of hidden markets crucially depends on the level of financial integration of the economy. Despite always imposing a burden on intermediaries, unobservable markets allow agents to partially enjoy gains from financial integration when interbank markets are autarkic. In fully liberalized systems such effect instead disappears. Similarly, in autarky the distortion created by hidden markets improve the resilience of the system to unexpected liquidity shocks. With fully integrated interbank markets, such effect again disappears, as unexpected liquidity shocks always lead to bankruptcy and contagion.financial intermediation, financial liberalization, financial contagion, unobservable savings

The European Deposit Insurance Scheme: Economic Rationale, Issues and Policy Solutions

This note summarizes the economic case for completing the European Banking Union with a European Deposit Insurance Scheme (EDIS). The note highlights the role of the EDIS against panic-driven bank runs that might trigger sovereign crises in a doom loop, and spread across the Banking Union via several channels of financial contagion. The main takeaways that we can draw are three. First, the EDIS can be successful only if it acts fast and its commitment to intervene is perceived as credible. Second, there seems to be little evidence that the EDIS could generate an unwarranted cross-subsidization from the less vulnerable to the more vulnerable countries of the Banking Union. Third, there exist several mechanisms to correct bank incentives against the effects of legacy risk and moral hazard that the EDIS might bring about, and some of them are already into place

Financial Liberalization with Hidden Trades

How does the availability of unregulated market-based channels for the circulation of liquidity in the financial system affect the process of financial integration? To answer this question, I develop a two-country model of banking, where the banks have access to country-specific investment technologies, and agents can borrow and lend liquidity in a hidden market. I characterize the competitive equilibria at different levels of integration (both in the banking system and in the hidden market) and show that the only level of integration which the two countries are able to coordinate is the one where the two banking systems are autarkic, but international hidden trades are possible. In contrast to the previous literature, I also find that the resulting consumption allocation is constrained efficient

Recent progress in the theoretical deduction of airplane wings

The designing of an airplane requires an accurate knowledge of the aerodynamic properties of its wings, as expressed in the polar diagram. It is important to continue the theoretical researches on the aerodynamic phenomena of wings, in order to determine by calculation, their fundamental characteristics and to increase and formulate our knowledge in this field

Marketing and the Church

This paper attempts to take an in-depth look at the current state of the Church in America and how marketing has and will continue to play a key role in its position in society. The word marketing comes from the concept of the merchant buying and selling a product - in the market. From a Christian perspective, marketing tells the story of the redemptive work of Jesus Christ - who bought and redeemed mankind for a price, saved from sin, and set apart for service to the Lord. Churches have this story, the greatest story to tell, but people are not listening (Hendricks). The issue for the church in a word: communication. The story of Jesus and his impact on people’s lives need to be heard by more people and more often. In simple terms, the message of the church is that Jesus came, died, and rose again so that man can be restored in his relationship with God. The top companies in the world generally have two things in common: amazing marketing and an amazing product. The church has the best product to offer, the church should also have the best marketing to share that product. The role of marketing in the church is to help fulfill the “Great Commission. Marketing is not everything, but it can be a vital tool and incredibly effective when used properly. We are to be good stewards of the message given to us

The welfare costs of self-fulfilling bank runs

We study the welfare implications of self-fulfilling bank runs and liquidity require- ments, in a neoclassical growth model where banks, facing long-lasting possible runs, can choose in any period a run-proof asset portfolio. In this framework, runs distort banks’ insurance provision against idiosyncratic liquidity shocks, and liquidity requirements resolve this distortion by forcing a credit tightening. Quantitatively, the welfare costs of self-fulfilling bank runs are equivalent to a constant consumption loss of up to 2.5 percent of U.S. GDP. Depending on fundamentals, liquidity requirements might generate small welfare gains, but also increase the welfare costs by up to 1.8 percent.info:eu-repo/semantics/publishedVersio

Aerodynamic characteristics of aircraft with reference to their use

Economic and design characteristics are examined in the design of airplanes and airships

Experimental apparatus for the study of propellers

The apparatus consists of a universal balance with transmission at variable speeds from 300 to 5,000 rpm and a group directly coupled to the model for speeds of 5 to 30,000 revolutions. This new apparatus was also designed with a torsion meter for measuring the torque. Tests were conducted on the effect of the angle between the propeller axis and the wind direction. The results presented correspond to a first series of tests made without an interposed wing and in which the distance between the plane of the propeller disk and the tail was maintained constant