Market Frictions and the Efficiency of Capital Allocation

The following dissertation contains two unique empirical studies that contribute to the overall literature in the field of Financial Economics in the areas of mutual fund investing and financial intermediation and regulation. The first Chapter, entitled “The Impact of Macroeconomic Stress on the U.S. Financial Sector”, examines the relative impact of macroeconomic stress on financial and non-financial U.S. firms. Empirical results show that macroeconomic shocks appear to have a larger impact on financial firms. Additionally, the sensitivity of financial firms to macroeconomic events can be traced to the influence of non-depository institutions, or “shadow banks”, like finance and investment companies, which are less regulated than depository institutions. The results coincide with several trends in the financial sector including increased competition, complexity and interconnectedness and highlight the need for governance mechanisms that account for the risks associated with these factors. The second chapter, entitled “Partial Adjustment Towards Equilibrium Mutual Fund Allocations: Evidence from U.S.-based Equity Mutual Funds”, examines the relative efficiency of equity mutual funds in terms of speed of portfolio adjustment by applying a partial adjustment model. Empirical results show that mutual fund managers are able and willing to quickly adjust their portfolios when results have been sub-optimal, implying that the cost of persistent poor performance is perceived as being high. Managers can offset about 106 percent of the deviation within one period. Additionally, results show that funds that typically engage in the costly production of specialized information, like emerging market and sector funds have more efficient speeds of portfolio adjustment than more passive funds, like market index funds. The results imply that actively managed funds may have efficiency advantages that have been previously ignored in the empirical literature

Market Frictions and the Efficiency of Capital Allocation

The following dissertation contains two unique empirical studies that contribute to the overall literature in the field of Financial Economics in the areas of mutual fund investing and financial intermediation and regulation. The first Chapter, entitled “The Impact of Macroeconomic Stress on the U.S. Financial Sector”, examines the relative impact of macroeconomic stress on financial and non-financial U.S. firms. Empirical results show that macroeconomic shocks appear to have a larger impact on financial firms. Additionally, the sensitivity of financial firms to macroeconomic events can be traced to the influence of non-depository institutions, or “shadow banks”, like finance and investment companies, which are less regulated than depository institutions. The results coincide with several trends in the financial sector including increased competition, complexity and interconnectedness and highlight the need for governance mechanisms that account for the risks associated with these factors. The second chapter, entitled “Partial Adjustment Towards Equilibrium Mutual Fund Allocations: Evidence from U.S.-based Equity Mutual Funds”, examines the relative efficiency of equity mutual funds in terms of speed of portfolio adjustment by applying a partial adjustment model. Empirical results show that mutual fund managers are able and willing to quickly adjust their portfolios when results have been sub-optimal, implying that the cost of persistent poor performance is perceived as being high. Managers can offset about 106 percent of the deviation within one period. Additionally, results show that funds that typically engage in the costly production of specialized information, like emerging market and sector funds have more efficient speeds of portfolio adjustment than more passive funds, like market index funds. The results imply that actively managed funds may have efficiency advantages that have been previously ignored in the empirical literature

The determinants of Islamic bank capital decisions

We report new evidence on the bank and institutional determinants of Islamic bank capital ratios in 28 countries between 1999 and 2013. Overall, we find that smaller, more profitable, and highly liquid Islamic banks are more highly capitalized. Additionally, improvements in the economic and financial environments and market discipline within a country correspond with higher Islamic bank capitalization. The results shed light on the impact that Sharia'a law restrictions have on Islamic banking capitalization. Our findings are most robust to banks that choose to hold capital well in excess of that required by regulators, consistent with traditional capital structure theory. Our results highlight the role that stable economic and political systems play in improving bank capitalization and reducing financial sector risk. By reducing political instability and corruption, improving legal systems, and encouraging access to capital markets, policymakers may incentivize managers to make financing decisions that increase the capitalization of the Islamic banking industry in developing countries

The \u3cem\u3eChlamydomonas\u3c/em\u3e Genome Reveals the Evolution of Key Animal and Plant Functions

Chlamydomonas reinhardtii is a unicellular green alga whose lineage diverged from land plants over 1 billion years ago. It is a model system for studying chloroplast-based photosynthesis, as well as the structure, assembly, and function of eukaryotic flagella (cilia), which were inherited from the common ancestor of plants and animals, but lost in land plants. We sequenced the ∼120-megabase nuclear genome of Chlamydomonas and performed comparative phylogenomic analyses, identifying genes encoding uncharacterized proteins that are likely associated with the function and biogenesis of chloroplasts or eukaryotic flagella. Analyses of the Chlamydomonas genome advance our understanding of the ancestral eukaryotic cell, reveal previously unknown genes associated with photosynthetic and flagellar functions, and establish links between ciliopathy and the composition and function of flagella

Teaching Middle School Students with Learning Disabilities to Recruit Positive Teacher Attention

Four middle school students with learning disabilities were taught to recruit teacher attention while they worked on assignments in two inclusive general education classrooms. The students were taught to show their work to the teacher two to three times per session and make statements such as: How am I doing? Training was conducted in the special education classroom and consisted of modeling, role-playing, corrective feedback, and praise. A multiple baseline across students design showed that recruitment training increased (a) the rate of recruiting by the students, (b) the rate of teacher praise received hy the students, (c) the rare of instructional feedback received by the students, and (d) the accuracy with which students completed their workbook assignments