Fin matters

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The Virtuous Circle of Investor Attention in Social Media

In previous posts, we discussed how media and firms can succefully draw investor attention. In this post, we shift the focus to investors themselves. The 2016 Journal of Behavioral Finance paper “Investor Attention on the Social Web” by Li, Hendler,… Continue Reading →

How Financial Markets Incorporate News – A Case Study of the Grenfell Tower Disaster Using Regression Discontinuity

On June 14, 2017, a fridge-freezer on the 4th floor of the Grenfell Tower block in London caught fire. The fire quickly spread, causing a horrible loss of at least 80 lives and injuring more than 70 people. Firefighters quickly… Continue Reading →

Feeling Blue on a Rainy Day? Weather and Market Makers’ Behavior

July 2017 – what a weather ride! First, temperatures up to 37 degrees Celsius in Stuttgart. Then, downpours for days on end. How did this affect you – apart from having to change plans for outings at short notice, or… Continue Reading →

Better Central? Central Clearing and Counterparty Risk in OTC Markets

What is the relation between central clearing and counterparty risk? Intuitively, it seems clear that a central clearing counterparty (CCP) improves the netting mechanism. With bilateral clearing, two trading partners can only net with one another. With central clearing, the… Continue Reading →

Big Risks with Small Price Impact – Counterparty Risk Management in CDS

Why the discussion about central clearing of credit default swap (CDS) contracts? For one thing, central clearing increases transparency. Once transactions have to go through a central clearing counterparty (CCP), the regulator can simply monitor the CCP to get an… Continue Reading →

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