We develop a model to study the efficiency of socially responsible investments (SRI) as a market-based mechanism to control firms' externalities. When responsible investors interact with profit-motivated investors, the former tend to concentrate on a subset of firms in the...

We build a model analyzing optimal environmental regulation in the presence of socially responsible investors. Investors care about sustainability of their portfolios but cannot fully resolve the pollution externality. Regulations, such as pollution tax and subsidies to clean firms, reduce...

Leveraging an institutional feature that Treasury auctions of different maturities are often held simultaneously, we propose  a method for estimating demand systems for Treasuries, avoiding the usual endogeneity issues in demand estimation. We implement our method using bidding data from...

We examine how intermediary capitalization affects  asset prices in a framework that allows for intermediary market power.  We introduce a model in which capital constrained intermediaries buy or trade an asset in an imperfectly competitive market, and show that weaker...

In traditional over-the-counter markets, investors trade bilaterally through intermediaries. We assess whether and how to shift trades on a centralized platform with trade-level data on the Canadian government bond market. We document that intermediaries charge a markup when trading with ...

We show that short-term debt in a firm’s optimal capital structure reduces investment under asymmetric information. Investors’ interpretation of underinvestment as a positive signal about the quality of the assets in place allows the equity holders to profit from short-term...