Contents
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Keynote by Itay GoldsteinPage 2
synthetic risk transfers, racial disparities in the mortgage market All on one pageAs in previous years, the FIN-FIRE workshop presented also a platform especially for junior researchers, for example represented by the contribution of Alex Osberghaus, a job market candidate from the Swiss Finance Institute in the 2025/2026 season. His job market paper sheds light on a possibly important, but overlooked feature of contemporary financial systems. As the Bloomberg Editorial Board pointed out in 2024, "If you're unfamiliar with synthetic risk transfers, there's a chance you'll hear all about them when the next financial crisis hits".
The presentation by Alex Osberghaus was dedicated to this increasingly important topic, focusing on the growing market for synthetic risk transfers (SRT) and the challenges it poses to financial market stability. Although SRT is becoming increasingly important for the financial market, the topic is largely unknown outside the sector. Banks utilise SRT to transfer portions of their corporate loan portfolios to NBFI investors, thereby actively managing risk exposure.
The study provided evidence that banks strategically shift capital-intensive loans and subsequently reduce monitoring, which raises concerns about moral hazard. Osberghaus identifies the close interdependence between issuing banks and non-bank financial intermediaries that invest in these securities. This raises the question of potential round-tripping issues and how authorities should regulate SRT markets to increase transparency and overall maintain financial stability.
In times of debates whether private data serves as currency on social media platforms, another very timely topic was covered by Sarah Zhang from the University of Manchester. “Data privacy legislation can reduce racial disparities in the mortgage market” was the conclusion of Sarah Zhang's presentation.
Zhang examined how the implementation of the California Consumer Privacy Act (CCPA) affected credit discrimination between minority and non-minority groups in the US mortgage market. She found that following the implementation, interest rate differences between minorities and non-minorities have declined. Additionally, the rejection rate for minority applications has decreased significantly. The reason for the reduction in racial disparities is the shift to a more data-driven lending process, driven by enhanced transparency requirements. Furthermore, FinTech companies are helping to reduce inequality by providing more loans to minorities.
Overall, the conference was both professional and constructive. There was an in-depth exchange of ideas, and all authors received helpful comments and recommendations for their research.
The programme of the conference as well as the presentations can be found on the event page of the FIN-FIRE workshop.
