Finance Matters

Finance Matters

Finance Matters: The MIT Sloan Finance Group Blog

Finance Matters is the MIT Sloan Finance Group’s platform for sharing the latest on Finance faculty research, perspectives on financial industry news, MIT Sloan finance-related events, and will feature guest posts from our faculty, students, alumni, and affiliates.

Bridging the knowledge gap on governments as financial institutions

Posted by Deborah Lucas on September 3, 2014

Ask most finance experts about the “world’s largest financial institutions,” and you’ll hear names like Citigroup, ICBC (China’s largest bank) and HSBC. However, governments top the list of large financial institutions, with investment and insurance operations that dwarf those of any private enterprise. For instance, last year the U.S. federal government made almost all student loans and backed over 97% of newly originated mortgages. Add to that Uncle Sam’s lending activities for agriculture, small business, energy and trade, plus its…
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A New Measure of Financial Intermediary Constraints

Posted by Hui Chen on June 12, 2014

The ability to measure the degree of financial intermediary constraint is of crucial importance for regulators and investors. Standard measures of intermediary constraint often focus directly on the riskiness of the financial institutions themselves, such as their level of credit risk, volatility, or leverage ratio. One such example is the TED spread, which is the difference between LIBOR, a short-term interest rate for uncollateralized interbank loans, and the yield for Treasury bills. Large TED spreads indicate that banks, and hence…
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Early Peek Advantage?

Posted by Jiang Wang on May 28, 2014

From 2007 to June 2013, a small group of fee-paying, high-speed traders received the bi-monthly results of the Michigan Index of Consumer Sentiment (ICS) from Thomson Reuters at 9:54:58, two seconds before the broader release at 9:55:00. This arrangement was initially reported on April 5, 2013 by Financial Times regarding a complaint by a former Thomson Reuters employee for his dismissal after telling US federal agent about this arrangement of tiered distribution of information. Wider media coverage followed in June…
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Opinions expressed in this blog are that of individuals and do not reflect the general opinion of Massachusetts Institute of Technology and MIT Sloan.