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Tag Archives: Financial Markets

How to Tax in Asia’s Digital Age

By Era Dabla-Norris, Ruud De Mooij, Andrew Hodge, and Dinar Prihardini Español New global reforms will change where tech giants pay taxes in Asia and make the international tax system more robust. Digitalization —the technology that powers fintech, e-commerce, and online services—enables us to make mobile money transfers, purchase goods and services online, and interact with people across the globe. It has created some of the largest global businesses, such as online platforms and...

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Taming Market Power Could (also) Help Monetary Policy

By Romain Duval, Davide Furceri, and Marina M. Tavares Some central banks are currently debating whether to tighten monetary policy to fight inflationary pressures, after having eased decisively in response to the COVID-19 shock. In making such decisions, central bankers have to consider how much businesses and consumers will respond. The structure of the financial system and the future expectations of consumers and businesses are key drivers of how effective monetary policy actions will be....

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Banking the Unbanked: The Past and Future of the Free Checking Account

Stein Berre, Kristian Blickle, and Rajashri Chakrabarti About one in twenty American households are unbanked (meaning they do not have a demand deposit or checking account) and many more are underbanked (meaning they do not have the range of bank-provided financial services they need). Unbanked and underbanked households are more likely to be lower-income households and households of color. Inadequate access to financial services pushes the unbanked to use high-cost alternatives for...

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Banking the Unbanked: The Past and Future of the Free Checking Account

Stein Berre, Kristian Blickle, and Rajashri Chakrabarti About one in twenty American households are unbanked (meaning they do not have a demand deposit or checking account) and many more are underbanked (meaning they do not have the range of bank-provided financial services they need). Unbanked and underbanked households are more likely to be lower-income households and households of color. Inadequate access to financial services pushes the unbanked to use high-cost alternatives for...

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The Overnight Drift in U.S. Equity Returns

Nina Boyarchenko, Lars C. Larsen, and Paul Whelan Since the advent of electronic trading in the late 1990s, S&P 500 futures have traded close to 24 hours a day. In this post, which draws on our recent Staff Report, we document that holding U.S. equity futures overnight has earned a large positive return during the opening hours of European markets. The largest positive returns in the 1998–2019 sample have accrued between 2 a.m. and 3 a.m. U.S. Eastern time—the opening of European...

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The Overnight Drift in U.S. Equity Returns

Nina Boyarchenko, Lars C. Larsen, and Paul Whelan Since the advent of electronic trading in the late 1990s, S&P 500 futures have traded close to 24 hours a day. In this post, which draws on our recent Staff Report, we document that holding U.S. equity futures overnight has earned a large positive return during the opening hours of European markets. The largest positive returns in the 1998–2019 sample have accrued between 2 a.m. and 3 a.m. U.S. Eastern time—the opening of European stock...

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Chart of the WeekHow Stock Markets Respond to Social Unrest

Philip Barrett and Sophia Chen What happens to stock markets when social unrest—such as mass protests and riots—occurs? Are investors scared-off by the disorder? Or are they buoyed by the prospect of positive, popular change in response to unrest? Our chart of the week, drawn from our recent IMF staff working paper, uses a new dataset of 156 social unrest events during 2011–20 to shed some light on these questions. It shows that in countries with more open and democratic institutions, social...

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Did Dealers Fail to Make Markets during the Pandemic?

Jiakai Chen, Haoyang Liu, David Rubio, Asani Sarkar, and Zhaogang Song In March 2020, as the COVID-19 pandemic disrupted a range of financial markets, the ability of dealers to maintain liquid conditions in these markets was questioned. Reflecting these concerns, authorities took numerous steps, including providing regulatory relief to dealers. In this post, we examine liquidity provision by dealers in several financial markets during the pandemic: how much was provided, possible...

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Did Dealers Fail to Make Markets during the Pandemic?

Jiakai Chen, Haoyang Liu, David Rubio, Asani Sarkar, and Zhaogang Song In March 2020, as the COVID-19 pandemic disrupted a range of financial markets, the ability of dealers to maintain liquid conditions in these markets was questioned. Reflecting these concerns, authorities took numerous steps, including providing regulatory relief to dealers. In this post, we examine liquidity provision by dealers in several financial markets during the pandemic: how much was provided, possible causes...

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The Persistent Compression of the Breakeven Inflation Curve

Richard K. Crump, Nikolay Gospodinov, and Desi Volker Breakeven inflation, defined as the difference in the yield of a nominal Treasury security and a Treasury Inflation-Protected Security (TIPS) of the same maturity, is closely watched by market participants and policymakers alike. Breakeven inflation rates provide a signal about the expected path of inflation as perceived by market participants although they are also affected by risk and liquidity premia. In this post, we scrutinize the...

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