Stopping “drug kingpins and rogue nations”: how US economic sanctions are shaping global banks
To date, at least nine international banks have paid enormous sums to the US as a result of violating US economic sanctions, including the French bank BNP Paribas, which was fined nearly $9 billion in 2014. As the US increasingly employs its punitive arsenal to force non-US banks to comply, this has resulted in their Americanization, argue two HEC professors.
Price formation and volatility: the role of dealers and market makers
In our recent research published in the Journal of Financial Economics, we analyze price formation in a context in which dealers repeatedly compete for the opportunity to trade with retail traders. We characterize equilibria in which dealers’ pricing strategies are optimal irrespective of the private information that each dealer may possess. We propose a robust model that predicts how the dealers share information and equilibrate the trade.
Thinking through cannabis markets
The relationship between cannabis and society is a long and deeply contested one. Throughout history, cannabis has been associated with everything from health, leisure, and pop culture to criminal and immoral behavior. But beyond the simple debate about whether cannabis is good or bad, the study of cannabis markets needs interdisciplinarity, to know what is required to construct an effective and fair contested market.
Free trade, household debt and the great recession
The rise of imports from China in the 2000s’ led to a strong increase in American households’ debt, reveals a study written by Professors Jean-Noël Barrot, Erik Loualiche, Matthew Plosser and Julien Sauvagnat. This effect is mainly explained by manufacturing workers borrowing to smooth consumption after facing deteriorating labor market conditions. Import competition from China therefore has not only played a role in the dramatic drop in US manufacturing employment after 2000, but has also fueled the credit bubble that has ultimately led to the Great Recession.
Making Sense of Economic Models
Economics is not considered the most successful scientific discipline, to say the least. There are various lines of critique of the field, some more justified than others. Two recent research papers attempt to add new angles to this methodological discussion, arguing that economic models can be useful and serve society in ways that differ from the classical view of science.
Analyzing Decisions is part of our Humanity
There is a species of sea urchins that begins its life as an animal but ends it as a plant. It crawls at the bottom of the ocean until it finds a place to cast its root. From that point on it has no more decisions to make, and it becomes a plant. Importantly, after having decided where to plant itself, it consumes its own brain. There is, apparently, no more use for the brain once all decisions have been made.
How can Finance help address the challenges of our global society?
September 29 2016 saw HEC Paris’ Society & Organizations Center (SnO) and HEC Alumni organize “Finance4Good”, a daylong conference on the ever-evolving relationship between the world of finance and society. Following up on last year’s successful Climate for Change conference, this second annual gathering saw Michel Camdessus, Knut Norheim Kjaer, Arunma Oteh, Bertrand Badre and other major speakers discuss key global issues. These included the role of the financial sector in the context of the current energy transition; the difficult face-off between financial incentive and inclusive growth; and the need for financial innovations destined to create a more sustainable society. Over 700 hundred people witnessed and partook in lively debates questioning. We invite you to read the summaries of the six thematic round-tables by clicking on the links below.
How to prepare for the future by aggregating forecasts
Our ongoing machine-learning research at HEC Paris helps managers paint a clearer vision of the future. By programming a computer to aggregate lots of different forecasting methods – of which there are many – managers are no longer faced with the difficult decision of which one to choose.