We assemble data about executives on the boards of national supervisory authorities (NSA) in European banking, which reveal that 40% have an employment history in the financial industry. Appointment patterns to NSA boards differ substantially across countries. Generally, the appointment of former finance professionals as prudential supervisors is inconsequential for banks‘ valuations, capitalization, and asset growth. The exception are positive, but short-lived valuation effects for those banks whose alumni are appointed as executives of directly responsible NSA boards. Circumstantial evidence suggests that a “proximity bias“ is a more likely driver of this effect inste

How does immigration affect support for redistribution? While most research focuses on overall tax and spending levels, we investigate how immigration influences preferences conditional on tax structures. Using two original survey experiments in the UK, we find that low- and middle-income respondents are more likely to support redistribution to immigrants under progressive systems shielding them from fiscal costs, but oppose redistribution when immigrants are identified as beneficiaries and the tax structure increases their fiscal burden. In contrast, high-income respondents' preferences are largely unaffected by either tax structure or immigrant inclusion. These findings suggest that progressive taxation (1) is a viable revenue-generating strategy without provoking major political backlash; (2) reduces native resistance to immigrant welfare inclusion; (3) helps explain puzzling variation in immigration's effects on welfare attitudes; and (4) clarifies why low- and middle-income groups sometimes reject generous welfare programs despite standing to benefit. Our results highlight the importance of institutional design in shaping how economic self-interest and immigration concerns interact.

Using the adoption of Zombie Property Laws (ZL) across several US states, we show that requiring lenders to maintain properties in the foreclosure process affects mortgage lending decisions and standards. Difference-in-differences estimations using a state border design show that ZL incentivizes lenders to screen mortgage applications more carefully: they deny more applications and impose higher interest rates on originated loans, especially risky loans. In turn, these loans exhibit higher ex post performance. ZL also affects lender behavior after borrowers become distressed, causing them to strategically keep delinquent mortgages alive. Our findings inform the debate on policy responses to foreclosure crises.

We study the interaction of expansionary rate-based monetary policy and quantitative easing, despite their concurrent implementation, by exploiting heterogeneous banks and the introduction of negative monetary-policy rates in a fragmented euro area. Quantitative easing increases credit supply less, translating into weaker employment growth, when banks’ funding costs do not decrease. Using administrative data from Germany, we uncover that among banks selling their securities, central-bank reserves remain disproportionately with high-deposit banks that are constrained due to sticky customer deposits at the zero lower bound. Affected German banks lend relatively less to firms while increasing their interbank exposure in the euro area.

Exploiting the heteroskedasticity of the changes in short-term and long-term interest rates and exchange rates around the FOMC announcement, we identify three structural monetary policy shocks. We eliminate the predictable part of the shocks and study their effects on financial variables and macro variables. The first shock resembles a conventional monetary policy shock, and the second resembles an unconventional monetary shock. The third shock leads to an increase in interest rates, stock prices, industrial production, consumer prices, and commodity prices. At the same time, the excess bond premium and uncertainty decrease, and the U.S. dollar depreciates. Therefore, this third shock combines all the characteristics of a central bank information shock.

We study how individuals' perceptions of current and future levels of income inequality change during periods of expansionary fiscal policy. In a randomized controlled trial (RCT), we provide information on fiscal expansion to a representative sample of the German population. Our findings reveal that combining a fact-based (numerical) information treatment with a narrative treatment about fiscal expansion plans reduces inequality expectations among respondents who are ex-ante dissatisfied with the government's economic policy. These effects are more pronounced among respondents without a college degree or with low political interest, highlighting the importance of narrative information for individuals who are likely to benefit most from it. We explore potential mechanisms by examining revisions in macro- and micro-level assessments of future economic conditions and find that respondents primarily update their expectations regarding economic growth and individual layoff risk.

The previous literature finds a positive effect of institutional (relative to other investors’) ownership on firms’ innovation output . We study the impact of increases in the concentration of institutional investors’ ownership on firms’ decisions to invest in innovation and their innovation output. By reducing short-term earnings pressure, concentrated institutional investors’ ownership increases managers’ incentives to invest in R&D. However, it decreases firms’ acquisitions of external innovation due to empire-building and dilution concerns. Overall, firms’ future patents and citations decrease. Our results indicate that the previously found positive effect of institutional investors on innovation declines as the ownership of these investors becomes more concentrated. Despite that, we find that blockholder institutional ownership increases firm value. Hence, large institutional investors take measures to preserve the value of their ownership interests, even if they result in reduced innovation.