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Strategic Liquidity Mismatch and Financial Sector Stability
This paper examines whether banks strategically incorporate their competitors? liquidity mismatch policies when determining their own and how these collective decisions impact financial sector stability. Using a novel identification strategy exploiting the presence of partially overlapping peer groups, I show that banks? liquidity transformation activity is driven by that of their peers. These correlated decisions are concentrated on the asset side of riskier banks and are asymmetric, with mimicking occurring only when competitors are taking more risk. Accordingly, this strategic behavior ...
Pirates without Borders: The Propagation of Cyberattacks through Firms’ Supply Chains
We document the propagation eﬀects through supply chains of the most damaging cyberattack in history and the important role of banks in mitigating its impact. Customers of directly hit ﬁrms saw reductions in revenues, proﬁtability, and trade credit relative to similar ﬁrms. The losses were larger for customers with fewer alternative suppliers and suppliers producing high-speciﬁcity inputs. Internal liquidity buﬀers and increased borrowing, mainly through bank credit lines at higher rates due to increased risk, helped aﬀected customers to maintain investment and employment. ...