Financial Markets

Financial Markets

Research

Jerry Brito, Andrea Castillo | May 03, 2016
As the world’s first decentralized digital currency, Bitcoin has the potential to revolutionize online payment systems and commerce in ways that benefit both consumers and businesses. Individuals can now avoid using an intermediary such as PayPal or submitting credit card information to a third party for verification—both of which often involve transaction fees, restrictions, and security risks—and instead use bitcoins to pay each other directly for goods or services.
Bruce Yandle | Mar 01, 2016
With falling exports induced by a strong dollar, declining investment in the energy sector driven by falling oil prices, and a Chinese economy that continues to weaken, the US economy seems to be locked in low gear. GDP growth for 4Q2015 came in at a snail-paced 0.7 percent, giving 2.4 percent growth for the year, the same as for 2014. Pass the word. The world is flat!
Bruce Yandle | Dec 01, 2015
Fed uncertainty, the levitated dollar, China’s continuing weak economy, Europe’s mixed bag, and US political crazy season combine to yield a slow but somehow sound winter economy. Let’s take it from the top. The most recent third quarter 2015 GDP growth estimate arrived to the tune of 1.5 percent.
Todd Zywicki | Sep 29, 2015
A new paper for the Mercatus Center at George Mason University reviews the law and economics of consumer debt collection and its regulation and concludes that the CFPB should consider all the potential consequences of new regulation—both intended and unintended—to ensure that it will benefit consumers.
Bruce Yandle | Sep 01, 2015
June’s Economic Situation began with Dorothy, Tin Man, Scarecrow, and Lion searching for the Yellow Brick Road and wondering if it had disappeared. Since then, there’s been a whole lot of shaking going on. In this report, I first take a look back to June and come forward. Then, in the section to follow, I will deal with China, devaluation, and financial market reactions. After that, I cover some specialized topics. Let’s hit the road!
Jason Scott Johnston , Todd Zywicki | Aug 03, 2015
In a new study for the Mercatus Center at George Mason University, law professors Jason Scott Johnston and Todd Zywicki provide an overview and critique of the CFPB’s report. The study criticizes the report using primarily evidence supplied by the report itself. The CFPB’s findings show that arbitration is relatively fair and successful at resolving a range of disputes between consumers and providers of consumer financial products, and that regulatory efforts to limit the use of arbitration will likely leave consumers worse off.

Testimony & Comments

Brian Knight | May 12, 2016
The recent rise of “FinTech”—the use of technology to provide financial services in innovative ways—has the potential to significantly change how consumers access financial services. These changes are pressuring existing regulatory structures and norms, and they are creating concern that regulators will hamper needed modernization or fail to prevent a harmful destabilization of the financial system. I commend the OCC for acknowledging that its existing model for regulation could be improved to better match the needs of the current market and for providing an initial framework for how it plans to address innovation within its jurisdiction.
Holly A. Bell | Mar 16, 2016
Ill-considered regulation regarding algorithmic trading will adversely affect the ability of legitimate market participants to contribute to liquidity, price discovery, narrow spreads, and low trading costs. The CFTC shares with market participants a growing interest in algorithmic trading and its potential effects on the markets. Rather than working with market participants cooperatively, the Commission proposes a prescriptive regime applicable to virtually any firm that trades in the futures (and swaps) markets. If finalized, this proposal will establish an approach dominated by enforcement that will chill firms’ willingness to work with the Commission to address emerging problems in the area. In addition, by opening firms’ source code to unlimited inspection by the Commission and others, the proposal creates dangerous vulnerabilities for an asset of utmost importance to trading firms.
Hester Peirce | Mar 15, 2016
Chairman Shelby, Ranking Member Brown, and Members of the Committee, I am honored to appear before you today as one of the President’s nominees to serve as a member of the U.S. Securities and Exchange Commission. It is a particular privilege to be considered for the SEC together with Professor Lisa Fairfax.
Thomas W. Miller, Jr. | Feb 11, 2016
Conversations about consumer credit often reflect utopian visions of the world. Many people imagine that a few tweaks to regulations can ensure that everyone has the money needed to feed, clothe, and shelter the family. According to this logic, if households need to borrow money, lenders will treat them fairly, charge little, and always be repaid. But no matter how hard we all try, a well-crafted regulatory framework cannot bring us this utopia. Deliberate, empirically informed regulators, however, can do much to preserve and expand consumers’ options along the nonbank-supplied small-dollar loan landscape.
Stephen Matteo Miller | Jan 29, 2016
While higher capital requirements can reduce the likelihood of banking crises, I would like to raise two key issues concerning the proposed policy statement: 1) bank subsidiary capital requirements may be more effective than holding company capital requirements, and 2) the benefit-cost analysis used to analyze the rule could be improved by adding other dimensions to the analysis.
J. W. Verret | Sep 30, 2015
The explosive growth in federally backed loan and guaranty programs has been an appropriate focus of congressional oversight in recent years. The Office of Management and Budget (OMB) estimates the federal government supports over $3 trillion in loans and guarantees. Those loans and guarantees are often shrouded by indirect government support and unreasonable assumptions in government accounting practices. I submit that the Securities Investor Protection Corporation’s (SIPC) provision of securities custody insurance should be an appropriate part of that conversation.

Research Summaries & Toolkits

Speeches & Presentations

Expert Commentary

May 23, 2016

The use of technology to better assess a potential borrower's risk profile and score borrowers who previously could not be scored-or were scored inaccurately-is one of the most exciting elements of marketplace lending.
May 13, 2016

Although it's been a few years since the most recent increase, the $15 proposals cannot simply be written off as a cost-of-living adjustment, as the consumer price index is up only some 11 percent since the previous increase.
May 12, 2016

The question of whether the current regulatory environment is adequate or unnecessarily impeding positive innovation is gaining importance as technology continues to allow nontraditional companies to provide financial services in new ways.
May 11, 2016

The Mercatus Center at George Mason University is pleased to announce David Beckworth will join as a senior research fellow with the Program on Monetary Policy, starting July 1st, 2016.
May 02, 2016

Using RICO to take down lenders will stifle market innovation and competition.
May 02, 2016

The Consumer Financial Protection Bureau has had a hard time in court recently. Its efforts to demand information and documents from a for-profit college accreditor were recently rejected by a federal judge in D.C. on the grounds that the agency lacks the statutory authority to stray this far from consumer finance.

Charts

The Dodd-Frank Wall Street Reform and Consumer Protection Act has been generally associated with an explosion in federal financial regulatory restrictions. RegData permits us to specifically examine which agencies produced regulatory restrictions associated with the law. Dodd-Frank was associated with a substantial increase in the Federal Reserve’s role as a regulator, as its number of regulations jumped 32 percent in the 4 years since the passage of the legislation.

Experts

Tyler Cowen is Holbert L. Harris Chair of Economics at George Mason University and serves as chairman and general director of the Mercatus Center at George Mason University. With colleague Alex Tabarrok, Cowen is coauthor of the popular economics blog Marginal Revolution and cofounder of the online educational platform Marginal Revolution University.
Garett Jones is a senior scholar and BB&T Professor for the Study of Capitalism at the Mercatus Center and an associate professor of economics at George Mason University. He specializes in macroeconomics, monetary economics, and the microfoundations of economic growth.
Arnold Kling is a Mercatus Center–affiliated senior scholar at George Mason University and a member of the Financial Markets Working Group. He specializes in housing-finance policy, financial institutions, macroeconomics, and the inside workings of America’s federal financial institutions. He also is an adjunct scholar at the Cato Institute in Washington, DC.
Brian Knight is a Senior Research Fellow for the Financial Markets Working Group at the Mercatus Center at George Mason University.
Stephen Matteo Miller is a senior research fellow at the Mercatus Center. He is interested in the origins, effects and resolution of market crashes and financial crises.

Podcasts

David Beckworth | May 16, 2016
National Review senior editor Ramesh Ponnuru discusses his adventure into monetary economics. He shares his thoughts on some of the current-day misconceptions surrounding Federal Reserve policy and makes the case for a more nuanced, yet rules-based approach toward monetary policy.

Recent Events

Please join the Mercatus Center’s Program on Monetary Policy Director Scott Sumner, and Visiting Scholar David Beckworth, for an in-depth discussion on the Federal Reserve. Just a week after Federal Reserve Chair Janet Yellen’s Congressional testimony, Mercatus scholars will analyze current Federal Reserve policy (like the December rate hike), and lead an informative discussion on the future of monetary policy.

Books

Scott Sumner | Dec 01, 2015
The Midas Paradox is a landmark treatise that solves mysteries that have long perplexed economic historians, and corrects misconceptions about the true causes, consequences, and cures of macroeconomic instability. Like Milton Friedman and Anna J. Schwartz’s A Monetary History of the United States, 1867–1960, it is one of those rare books destined to shape all future research on the subject.

Media Clippings

Hester Peirce | Nov 13, 2014
This excerpt originally appeared in Bloomberg.
Stephen Matteo Miller | Nov 03, 2014
This excerpt originally appeared in the Washington Examiner.
Todd Zywicki | Oct 20, 2014
This excerpt originally appeared in the Washington Examiner.
Jason J. Fichtner | Jul 24, 2014
This excerpt originally appeared in FOX Business.
Jason J. Fichtner | Jul 17, 2014
This excerpt originally appeared in FOX Business.
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