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Working Paper
Why Do Short Sellers Like Qualitative News?
Short sellers trade more on days with qualitative news--i.e. news containing fewer numbers. We show that this behavior is not informationally motivated but can be explained by short sellers exploiting higher liquidity on such days. We document that liquidity and noise trading increase in the presence of qualitative news thus enabling short sellers to better disguise their informed trades. Natural experiments support our findings. For example, qualitative news has a bigger effect on short sellers' trading after a decrease in liquidity following a stock's deletion from S&P 500 and a lower ...
Discussion Paper
Internationalization of the Chinese renminbi: progress and outlook
The international role of the Chinese renminbi has received increased attention recently as Chinese authorities push for increased international usage of the renminbi and Western sanctions on Russia potentially increase renminbi attractiveness. Some newspaper article headlines even imply that the renminbi is about to rival the U.S. dollar as the world's dominant international currency.
Working Paper
Are Euro-Area Corporate Bond Markets Irrelevant? The Effect of Bond Market Access on Investment
We compare how bond market access affects firms? investment decisions in the United States and the euro area. Having a bond rating enables US corporations to invest more and undertake more acquisitions. In contrast, in the euro area, bond ratings have no effect on investment decisions. Similarly, firms with bond ratings have higher leverage in the United States, but not in the euro area. This difference may be due to euro-area firms getting sufficient financing from banks. Consistent with this explanation, euro-area bond ratings became more relevant for investment after the banking crisis of ...
Discussion Paper
The International Role of the U.S. Dollar – 2025 Edition
For most of the last century, the preeminent role of the U.S. dollar in the global economy has been supported by the size and strength of the U.S. economy, its stability and openness to trade and capital flows, and strong property rights and the rule of law. As a result, the depth and liquidity of U.S. financial markets is unmatched, and there is a large supply of extremely safe dollar-denominated assets.