Fall 2011 

Fall 2011 Research Grant Awards
November 1, 2011

The Center for Global Economy and Business offers a small number of limited research grants to Stern faculty for projects related the interests of its research groups. In the Fall of 2011, the Center completed its first grant cycle. All full-time faculty were invited to apply for grants. In November, nine research grants were awarded to a total of eleven Stern faculty members.

The following Stern faculty received Fall 2011 Center research grants (sum in parentheses):

Fall 2011 Research Grants
Resulting Papers and Materials
  • Viral Acharya
    • The 'Greatest' Carry Trade Ever? Understanding Eurozone Bank Risks

    • Abstract: We show that eurozone bank risks during 2007-2013 can be understood as a form of “carry trade” behavior. Bank equity returns load positively on peripheral (Greece, Ireland, Portugal, Spain, and Italy, or GIPSI) bond returns and negatively on German government bond returns, a position that generated “carry” until the deteriorating GIPSI bond returns impacted bank balance sheets. The positive GIPSI loadings correlate with banks’ holdings of GIPSI bonds, as well as the negative German loading with banks’ short-term debt exposures. We find support for risk-shifting moral hazard and regulatory arbitrage motives at banks in that carry trade behavior is stronger for large banks and banks with low capital ratios and high risk-weighted assets. We also evaluate alternative hypotheses such as the home bias of peripheral banks and suasion by domestic governments.

  • Marcin Kacperczyk and Philipp Schnabl
    • How Safe are Money Market Funds?

    • Abstract:
      We examine the risk-taking behavior of money market funds during the financial crisis of 2007-10. We show that as a result of the crisis: (1) money market funds experienced an unprecedented expansion in their risk taking opportunities; (2) funds had strong incentives to take on risk because fund inflows were highly responsive to fund returns; (3) funds sponsored by financial intermediaries that also offered non-money market mutual funds and other financial services took on less risk, consistent with their sponsors internalizing concerns over negative spillovers to the rest of their business in case of a run; (4) funds sponsored by financial intermediaries with limited financial resources took on less risk, consistent with their sponsors having limited ability to stop potential runs. These results suggest that money market funds' risk-taking decisions trade off the benefits of fund inflows with the risk of causing negative spillovers to other parts of fund sponsors' business.

  • Robin Lee
    • Channel 5 or 500? Vertical Integration, Favoritism, and Discrimination in Multichannel Television

    • Abstract:
      We analyze the impact of vertical integration between upstream content and downstream distribution firms on carriage, positioning, and viewership of cable television channels. Using fourteen years of comprehensive channel lineup data for the population of U.S. cable systems and individual level viewership data, we examine how vertically integrated cable system operators differentially treat their own versus rival channels. We find that: (i) integrated operators carry their own channels more often than other non-integrated operators, (ii) integrated operators place content that is the same genre as their own on less widely available tiers, (iii) integrated operators place their own channels in lower positions than other operators place the same channels, and (iv) lower channel positions are favorable because they lead to more viewership. We also find weaker evidence that integrated operators place content that is rival to their own content in worse channel positions. However, in other cases, we find that vertically integrated firms treat content that is rival to their own just as other unaffiliated distributors treat that content.

  • Gabriel Natividad
    • Quotas, Productivity and Prices: The Case of Anchovy Fishing

    • Abstract:
      I exploit a 2009 reform that introduced individual fishing quotas (catch shares) for Peruvian anchovy - the largest fishery in the world - to assess the causal impact of production quotas on within-firm productivity and market prices. Unique features of the data allow me to create two alternative counterfactuals: (i) anchovy fishing operations in a region of the country that was mandated to implement quotas with a delay, and (ii) variation in quota allocations across ships. I find that quotas do not increase within-asset or within-firm productivity in quantities. Instead, a 200% increase in anchovy prices benefits extraction firms through higher revenues, consistent with two mechanisms enacted by individual fishing quotas: more orderly industry operations reducing excess supply and an increase in bargaining power of extraction firms with respect to fish-processing. Several market characteristics across geographies differentially affect market prices after the quota regime. Supplementary evidence on fewer operational infractions, higher product quality, and a lower banking delinquency observed during the quota regime suggests the existence of efficiency gains rather than purely rent transfers.