Finance

Large, investment-grade companies such as Walmart and Home Depot that can easily borrow money in the capital markets often receive financing from their much smaller, credit-constrained suppliers. A new study examines the effects of this pattern of financing and finds that it squeezes small suppliers, creating a cash shortfall and causing them to cut back on capital investments.

Europe is still struggling to emerge from the financial crisis. Though recent stress tests by the European Central Bank gave passing grades to 90% of the region’s banks, critics question the transparency and rigor of the tests. Professor Sascha Steffen of ESMT European School of Management and Technology, a member of the Global Network for Advanced Management, talked with Yale Insights about the state of the banking system and the challenges of designing and implementing a single system to oversee banks across the Eurozone.

Lei Zhang ’02 has been one of the most successful investors in China during a time of unprecedented change. In a conversation with Yale’s Stephen Roach, he talked about rapid shifts in China’s business and culture, the birth of a consumer class, the Chinese innovation model, and the outmoded views of the country that remain prevalent in the West.

In a New York Times op-ed, Professor Robert J. Shiller explains that stock market movements are driven by popular narratives that spread like “thought viruses.” Secular stagnation—the idea that the global economy may languish for years to come—is the current story driving down the stock market. Whether true or false, the idea alone has the potential to erase five years of gains and create a bear market.

In the introductory lecture of his course Global Financial Crisis, Andrew Metrick describes how the financial panic of 2008 and the ensuing recession have created a new economic reality.

Paul Tucker was one of the key players at the Bank of England during the financial crisis of 2008-09. He says that the actions of policymakers and regulators since that time have built a more resilient financial system. But he also sees big challenges ahead that will require regulators to be more nimble and flexible than they’ve ever been before.

The initial public offering (IPO) market recently saw its busiest week since 2001. A new study by Yale School of Management professors Matthew Spiegel and Heather Tookes reveals how these and other IPOs affect rival firms over time.

Former Spanish prime minister José Luis Rodríguez Zapatero discusses Spain’s long, difficult recovery from the global economic crisis and the lessons of the crisis for the future of the European Union.

Millions of government workers in the U.S. are relying on pension plans for retirement, and yet these plans are underfunded by at least $1 trillion. Asset manager Ranji Nagaswami ’86 argues that addressing this challenge is about more than assets and liabilities—we have to look at how funds are run and, critically, how they think about risk.

In a New York Times op-ed, Professor Robert Shiller writes that efforts to prepare for climate change should include the use of private institutions of risk management, such as insurance and securitization, to share risk and smooth the unpredictable effects of future disasters.