According to evidence from new research by Finance Professors Swaminathan Kalpathy and Amar Gande, U.S. Federal Reserve emergency financial assistance ("bailouts") is higher among firms whose CEOs have stronger risk-taking incentives. In “CEO Compensation at Financial Firms,” the authors disentangle whether the incentives inherent in CEO compensation contributed to the financial crisis.

Banks have played a distinctive role in the financial system. In a forthcoming Journal of Finance paper by Finance Professor Amar Gande and co-author Anthony Saunders, the nature of banks’ special role is analyzed given a burgeoning secondary market for bank debt. The secondary market for loans is now almost as large as the bond market. The secondary loan market even proved resilient during the recent financial crisis, in contrast to the dramatic decline occurred in structured finance products.