ABSTRACT This paper examines the nature and extent of the impact that news related to cryptocurrencies and central bank digital currencies (CBDCs) has on the stock returns of a sample of major global banks and explores the implications for the broader economy and global financial stability. Our results suggest that shocks originating in the cryptocurrency markets have a negative but short‐lived effect on the performance of the banking sector, whereas the adoption of CBDCs has a positive impact on bank stock performance. These findings offer valuable insights for both policymakers and financial institutions, highlighting the importance of incorporating effective safeguards into the regulatory frameworks for crypto assets and CBDCs to mitigate potential risks to financial stability.
This note deals with the profitability effects of different upstream market structures (bilateral monopoly vs. monopoly) in a vertical industry with downstream price competition for differentiated goods and convex production technology. The main findings offer new implications for the vertical market theory: Fiercer competition in the product market may require a strong monopoly power in the input market to achieve both the highest final firms' profitability and the highest total channel profit.
Standard theories of mandated benefits predict that policies such as parental leave affect wages mainly through employer costs. This paper shows that job-protected parental leave can also change firms' wage-setting power. In a monopsony framework, the labor supply facing a firm depends on the composition of worker separations. Job-protected leave reduces childbirth-related separations to non-employment, which are relatively insensitive to wages compared with ordinary job quits. The remaining workforce becomes more responsive to wage differences across firms, raising labor-supply elasticity and reducing monopsony power. Parental leave therefore has two opposing wage effects: a cost effect that lowers wages and a monopsony-power effect that raises them. The paper derives conditions under which each force dominates for women and men and studies the implications for the gender wage gap. Identical leave reforms can generate different wage effects across labor markets with different degrees of monopsony power.
We examine liquidity spillovers within and between the sovereign bond spot and futures markets in the euro area, covering the periods before, during, and after the COVID-19-induced dash for cash episode. Our results indicate that while liquidity spillovers were significantly amplified during the height of the crisis, the magnitude of these effects abated within a month, suggesting a rapid recovery in market liquidity conditions. Our research findings have implications for policy and can support decision-making.
This study considers an incumbent firm and a newcomer competing in an old market and a new one in a modified Hotelling model. Consumers must pay a privacy cost to conceal their personal information. Otherwise, their personal information is left in the old market, and only the incumbent firm can utilize it. If mismatch costs are homogeneous across markets, both consumer and total surpluses are increasing with the privacy cost. However, if mismatch costs are sufficiently heterogeneous across markets, both consumer and total surpluses are maximized when the privacy cost is zero. If heterogeneity is intermediate, consumer (total) surplus is maximized at zero (at a positive) privacy cost. Our study suggests that heterogeneity in mismatch costs across markets plays an important role in the welfare effects of privacy cost.
