Fallacies, Irrelevant Facts, and Myths in the Discussion of Capital Regulation: Why Bank Equity is Not Expensive

We examine the pervasive view that “equity is expensive,” which leads to claims that high capital requirements are costly and would affect credit markets adversely. We find that arguments made to support this view are either fallacious, irrelevant, or very weak. For example, the return on equity contains a risk premium that must go down if banks have more equity. It is thus incorrect to assume that the required return on equity remains fixed as capital requirements increase. It is also incorrect to translate higher taxes paid by banks to a social cost. Policies that subsidize debt and indirectly penalize equity through taxes and implicit guarantees are distortive. Any desirable public subsidies to banks’ activities should be given directly and not in ways that encourage leverage. Finally, suggestions that high leverage serves a necessary disciplining role are based on inadequate theory lacking empirical support. We conclude that bank equity is not socially expensive, and that high leverage is not necessary for banks to perform all their socially valuable functions, including lending, taking deposits and issuing money-like securities. To the contrary, better capitalized banks suffer fewer distortions in lending decisions and would perform better. The fact that banks choose high leverage does not imply that this is socially optimal, and, viewed from an ex ante perspective, high leverage may not even be privately optimal for banks. Setting equity requirements significantly higher than the levels currently proposed would entail large social benefits and minimal, if any, social costs. Approaches based on equity dominate alternatives, including contingent capital. To achieve better capitalization quickly and efficiently and prevent disruption to lending, regulators must actively control equity payouts and issuance. If remaining challenges are addressed, capital regulation can be a powerful tool for enhancing the role of banks in the economy.capital regulation, financial institutions, capital structure, too big to fail, systemic risk, bank equity, contingent capital, Basel.

A need basis for values

Values are viewed as partly based on needs, but little research has been devoted to testing this relationship. The need to attain or avoid cognitive closure may be an important cognitive-motivational factor underlying the endorsement and pursuit of particular values. The present research provided an empirical test of the relations between individual differences in the need for cognitive closure (NFCC) and Schwartz’s ten values. One hundred men and women from a southeastern British university completed measures of NFCC and basic values. Consistent with hypotheses, the results indicated that NFCC was positively associated with valuing Security, Conformity, and Tradition and negatively associated with valuing Stimulation and Self-Direction. In addition, NFCC was unrelated to valuing Hedonism, Power, Universalism, and Benevolence, but negatively related to valuing Achievement. Consistent with theories of epistemic closure, this research supports the idea that individual differences in NFCC give rise to values which match and satisfy individual needs to attain or avoid cognitive closure

Separating Reflection and Transmission Images in the Wild

The reflections caused by common semi-reflectors, such as glass windows, can impact the performance of computer vision algorithms. State-of-the-art methods can remove reflections on synthetic data and in controlled scenarios. However, they are based on strong assumptions and do not generalize well to real-world images. Contrary to a common misconception, real-world images are challenging even when polarization information is used. We present a deep learning approach to separate the reflected and the transmitted components of the recorded irradiance, which explicitly uses the polarization properties of light. To train it, we introduce an accurate synthetic data generation pipeline, which simulates realistic reflections, including those generated by curved and non-ideal surfaces, non-static scenes, and high-dynamic-range scenes.Comment: accepted at ECCV 201

HLA-Epitope Matching or Eplet Risk Stratification: The Devil Is in the Details

“Epitope matching” became a trending topic in organ transplantation. In fact, discussions on clinical implementation and utilization of this approach in organ allocation algorithms are currently on-going. More recently, the term “eplet mismatch load” was introduced in publications. While the terms are often used synonymously, they are NOT equivalent. This short overview is meant to emphasize the differences between the terms epitope matching and eplet mismatching (or mismatch load) as well as to provide perspective on different approaches for interpretation of immune compatibility between the donor of an organ transplant and the recipient. It highlights some of the less explored qualities of HLA-epitopes, and stresses the need to understand the differences between donor and recipient in terms of immunogenicity and ability to initiate an immune response. While the field of “epitope matching” shows enormous promise, it is still in its infancy. What is sorely missing is understanding of EPITOPE COMPATIBILITY rather than matching. Further work is required before new approaches can be introduced into routine clinical practice and organ allocation schemes

Fallacies, irrelevant facts, and myths in the discussion of capital regulation: Why bank equity is not expensive

We examine the pervasive view that equity is expensive which leads to claims that high capital requirements are costly and would affect credit markets adversely. We find that arguments made to support this view are either fallacious, irrelevant, or very weak. For example, the return on equity contains a risk premium that must go down if banks have more equity. It is thus incorrect to assume that the required return on equity remains fixed as capital requirements increase. It is also incorrect to translate higher taxes paid by banks to a social cost. Policies that subsidize debt and indirectly penalize equity through taxes and implicit guarantees are distortive. Any desirable public subsidies to banks' activities should be given directly and not in ways that encourage leverage. Finally, suggestions that high leverage serves a necessary disciplining role are based on inadequate theory lacking empirical support. We conclude that bank equity is not socially expensive, and that high leverage is not necessary for banks to perform all their socially valuable functions, including lending, taking deposits and issuing money-like securities. To the contrary, better capitalized banks suffer fewer distortions in lending decisions and would perform better. The fact that banks choose high leverage does not imply that this is socially optimal, and, viewed from an ex ante perspective, high leverage may not even be privately optimal for banks. Setting equity requirements significantly higher than the levels currently proposed would entail large social benefits and minimal, if any, social costs. Approaches based on equity dominate alternatives, including contingent capital. To achieve better capitalization quickly and efficiently and prevent disruption to lending, regulators must actively control equity payouts and issuance. If remaining challenges are addressed, capital regulation can be a powerful tool for enhancing the role of banks in the economy

Estimating Depth from RGB and Sparse Sensing

We present a deep model that can accurately produce dense depth maps given an RGB image with known depth at a very sparse set of pixels. The model works simultaneously for both indoor/outdoor scenes and produces state-of-the-art dense depth maps at nearly real-time speeds on both the NYUv2 and KITTI datasets. We surpass the state-of-the-art for monocular depth estimation even with depth values for only 1 out of every ~10000 image pixels, and we outperform other sparse-to-dense depth methods at all sparsity levels. With depth values for 1/256 of the image pixels, we achieve a mean absolute error of less than 1% of actual depth on indoor scenes, comparable to the performance of consumer-grade depth sensor hardware. Our experiments demonstrate that it would indeed be possible to efficiently transform sparse depth measurements obtained using e.g. lower-power depth sensors or SLAM systems into high-quality dense depth maps.Comment: European Conference on Computer Vision (ECCV) 2018. Updated to camera-ready version with additional experiment

Tissue remodeling: a mating-induced differentiation program for the Drosophila oviduct

<p>Abstract</p> <p>Background</p> <p>In both vertebrates and invertebrates, the oviduct is an epithelial tube surrounded by visceral muscles that serves as a conduit for gamete transport between the ovary and uterus. While <it>Drosophila </it>is a model system for tubular organ development, few studies have addressed the development of the fly's oviduct. Recent studies in <it>Drosophila </it>have identified mating-responsive genes and proteins whose levels in the oviduct are altered by mating. Since many of these molecules (e.g. Muscle LIM protein 84B, Coracle, Neuroglian) have known roles in the differentiation of muscle and epithelia of other organs, mating may trigger similar differentiation events in the oviduct. This led us to hypothesize that mating mediates the last stages of oviduct differentiation in which organ-specific specializations arise.</p> <p>Results</p> <p>Using electron- and confocal-microscopy we identified tissue-wide post-mating changes in the oviduct including differentiation of cellular junctions, remodeling of extracellular matrix, increased myofibril formation, and increased innervation. Analysis of once- and twice-mated females reveals that some mating-responsive proteins respond only to the first mating, while others respond to both matings.</p> <p>Conclusion</p> <p>We uncovered ultrastructural changes in the mated oviduct that are consistent with the roles that mating-responsive proteins play in muscle and epithelial differentiation elsewhere. This suggests that mating triggers the late differentiation of the oviduct. Furthermore, we suggest that mating-responsive proteins that respond only to the first mating are involved in the final maturation of the oviduct while proteins that remain responsive to later matings are also involved in maintenance and ongoing function of the oviduct. Taken together, our results establish the oviduct as an attractive system to address mechanisms that regulate the late stages of differentiation and maintenance of a tubular organ.</p

Fallacies, irrelevant facts, and myths in the discussion of capital regulation: Why bank equity is not socially expensive

We examine the pervasive view that 'equity is expensive' which leads to claims that high capital requirements are costly for society and would affect credit markets adversely. We find that arguments made to support this view are fallacious, irrelevant to the policy debate by confusing private and social costs, or very weak. For example, the return on equity contains a risk premium that must go down if banks have more equity. It is thus incorrect to assume that the required return on equity remains fixed as capital requirements increase. It is also incorrect to translate higher taxes paid by banks to a social cost. Policies that subsidize debt and indirectly penalize equity through taxes and implicit guarantees are distortive. And while debt´s informational insensitivity may provide valuable liquidity, increased capital (and reduced leverage) can enhance this benefit. Finally, suggestions that high leverage serves a necessary disciplining role are based on inadequate theory lacking empirical support. We conclude that bank equity is not socially expensive, and that high leverage at the levels allowed, for example, by the Basel III agreement is not necessary for banks to perform all their socially valuable functions and likely makes banking inefficient. Better capitalized banks suffer fewer distortions in lending decisions and would perform better. The fact that banks choose high leverage does not imply that this is socially optimal. Except for government subsidies and viewed from an ex ante perspective, high leverage may not even be privately optimal for banks. Setting equity requirements significantly higher than the levels currently proposed would entail large social benefits and minimal, if any, social costs. Approaches based on equity dominate alternatives, including contingent capital. To achieve better capitalization quickly and efficiently and prevent disruption to lending, regulators must actively control equity payouts and issuance. If remaining challenges are addressed, capital regulation can be a powerful tool for enhancing the role of banks in the economy

Diffuse reflectance imaging with astronomical applications

Diffuse objects generally tell us little about the surrounding lighting, since the radiance they reflect blurs together incident lighting from many directions. In this paper we discuss how occlusion geometry can help invert diffuse reflectance to recover lighting or surface albedo. Self-occlusion in the scene can be regarded as a form of coding, creating high frequencies that improve the conditioning of diffuse light transport. Our analysis builds on a basic observation that diffuse reflectors with sufficiently detailed geometry can fully resolve the incident lighting. Using a Bayesian framework, we propose a novel reconstruction method based on high-resolution photography, taking advantage of visibility changes near occlusion boundaries. We also explore the limits of single-pixel observations as the diffuse reflector (and potentially the lighting) vary over time. Diffuse reflectance imaging is particularly relevant for astronomy applications, where diffuse reflectors arise naturally but the incident lighting and camera position cannot be controlled. To test our approaches, we first study the feasibility of using the moon as a diffuse reflector to observe the earth as seen from space. Next we present a reconstruction of Mars using historical photometry measurements not previously used for this purpose. As our results suggest, diffuse reflectance imaging expands our notion of what can qualify as a camera.Natural Sciences and Engineering Research Council of Canada (NSERC) (Postdoctoral Fellowship)United States-Israel Binational Science Foundation (Grant 2008155)United States. National Geospatial-Intelligence Agency (NEGI-1582-04-0004)United States. Multidisciplinary University Research Initiative (Grant N00014-06-1-0734