NEWSLETTER of July 23, 2021

The following content has been added at finexpert:

Morgan Stanley | Oliver Wyman
UNDER WATER: WITHSTANDING LOW YIELDS IN TRADITIONAL LIFE
The report "Under Water Withstanding low yields in traditional life insurance", prepared in cooperation with Morgan Stanley, looks at the impact of the persistently low interest rates on the European life insurance industry. The German life insurance industry is particularly affected, so the study looks in detail at the German market. >more

Oliver Wyman
READY TO LEAD: HOW BANKS CAN DRIVE THE EUROPEAN RECOVERY
The banking system has proven resilient during the pandemic - despite one of the sharpest declines in gross domestic product (GDP) ever. While many companies have relied on financial government support, the banking sector's capital stock, built up after the financial crisis, has proven sufficient. The study outlines five tasks that banks in Europe must master in order for the economy to find its way back onto the growth path. >more

Franklin Templeton
CHINA CALLING: THE RISE OF CHINESE BOND MARKETS
Our fixed income experts review China’s market policy, economic reforms and forward-looking innovations. We examine sovereign bonds, commercial banks, currency and corporates, and offer views to help inform your decision making. >more

BlackRock
FINDING THE INFORMATIONAL ADVANTAGE IN PRIVATE EQUITY
Alternative data is changing the way we live, the way we work and now the way we invest. Nowhere is this change anticipated be more impactful than in some of the most highly sought-after opportunities in private markets, such as late stage venture capital or growth equity investing. >more

CAN SHORTS PREDICT RETURNS? A GLOBAL PERSPECTIVE
Ekkehart Boehmer, Zsuzsa R. Huszar, Yanchu Wang, Xiaoyan Zhang, and Xinran Zhang
2021
Using multiple short sale measures, we examine the predictive power of short sales for future stock returns in 38 countries from July 2006 to December 2014. We find that the days-to-cover ratio and the utilization ratio measures have the most robust predictive power for future stock returns in the global capital market. Our results display significant cross-country and cross-firm differences in the predictive power of alternative short sale measures. The predictive power of shorts is stronger in countries with non-prohibitive short sale regulations and for stocks with relatively low liquidity, high shorting fees, and low price efficiency. >more

HIGH-COST DEBT AND PERCEIVED CREDITWORTHINESS: EVIDENCE FROM THE U.K.
Andres Liberman, Daniel Paravisini, and Vikram Pathania
2020
We show that high-cost debt exacerbates financial constraints by affecting lenders’ perception of credit risk. Using data from a high-cost lender in the UK, we show that high-cost credit reduces applicants’ credit score and future bank credit even though it does not affect future debt repayment. These effects are not present among borrowers who are already tagged as high risk at application, consistent with high-cost credit affecting lenders’ beliefs about borrowers’ creditworthiness. The results highlight a novel channel through which high-cost credit can harm consumers’ financial health: a self-reinforcing stigma of high risk. >more