“Access to Finance” Blog
My blog, “Access to Finance”, aims to make complex academic papers accessible to a general audience. For posts on responsible business (both academic papers and current events), please visit the blog of my book “Grow the Pie“.
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Do Banks Offer Complex Mortgages to Mislead Customers?
Banks are often accused of making money off complex products that consumers don’t understand. In my book, I discuss how 2 million UK households were sold payment protection insurance policies that they’d never be able to claim on (e.g. due to being self-employed), but customers never understood this. Perhaps the most important product that a …
Do Banks Offer Complex Mortgages to Mislead Customers? Read More »
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How Political Connections Can Hurt, Rather Then Help, Firm Value
We often think of political connections as clearly favoring a company. Perhaps the most extreme example is Donald Trump owning around 500 businesses (collectively known as the Trump Organization), which may affect the decisions that he takes as President. But political connections can extend far beyond a politician owning a business himself. A politician, or …
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What Drives the Cost of Default Insurance?
One of the many negative consequences of the COVID-19 pandemic is that companies may default. Companies going bankrupt are indeed less important than deaths, but they still have human consequences. Employees lose jobs, suppliers lose customers (and then may themselves default), and investors lose money. We often downplay the third effect for two reasons. One …
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The Effect of the ECB’s Bond Buying Program
The European Central Bank is launching a €750 billion bond buying program to address the COVID-19 pandemic. Will this work? We obviously can’t predict the future. But we can analyse the past and study how the last major bond buying program – which addressed the Eurozone crisis – played out. In doing so, we must …
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Do Workers on Boards Protect Jobs in a Downturn?
A hot topic is whether companies should have workers on their boards, to ensure they act in the interest of stakeholders, not just shareholders. This debate was ongoing even before COVID-19 – for example, Theresa May initially suggested that she’d mandate worker representation when she became UK Prime Minister, but then decided against it. It’s …
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Spillover Effects of Hedge Fund Activism
Hedge fund activism is a controversial topic. Prominent lawyer Marty Lipton argues that the long-term future of corporate America is being undermined “by a gaggle of activist hedge funds who troll through S.E.C. filings looking for opportunities to demand a change in a company’s strategy or portfolio that will create a short-term profit without regard …
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“Grow the Pie” in 28 Tweets
On 6 April, I did a Twitter discussion on my book, hosted by Blackwell’s Bookshop. They asked me to start by providing 25-30 Tweets summarising the book, before opening it up to questions. I reproduce them below to provide the ideas of the book in a nutshell. Thanks very much for joining this discussion! I …
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The Inconsistency of ESG Ratings: Implications for Investors
(This article was initially featured on the blog for my book, “Grow the Pie: How Great Companies Deliver Both Purpose and Profit”) Investors are increasingly scrutinizing the ESG performance of companies. This is a positive development – if CEOs know that investors evaluate them on ESG factors, not just short-term earnings, they’ll prioritise these factors …
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Capital Markets in China
China will soon become the largest economy in the world, but many Westerners (myself included) know very little about it. I’ve thus tried to educate myself about the Chinese economy, and earlier posted a summary of an excellent article on corporate governance in China by Professors Fuxiu Jiang and Kenneth Kim. This has turned out to be one of …
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Corporate Finance in China
China will soon become the largest economy in the world, but many Westerners (myself included) know very little about it. I’ve thus tried to educate myself about the Chinese economy, and earlier posted introductions to corporate governance in China and capital markets in China. This post is an introduction to corporate finance in China – capital structure, corporate investment, …
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How Macroeconomic Conditions Affect Stock Prices
John Cochrane of Stanford has written an excellent review of recent advances and future research directions in macro-finance. Macro finance studies the relationships between asset prices (e.g. the level of the stock market) and economic conditions (e.g. whether we’re in a recession or a boom). These relationships are important. For example, if investors are more …
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Are US Industries Becoming More Concentrated?
Industry concentration has increased substantially in the US over the last two decades. But is this a problem? The obvious answer is yes – it allows companies to get away with high prices and low product choice, which is bad for consumers. But it may be that these companies have become large through offering great …