World Atlas of Government Financial Institutions. The goal of this large-scale project is to catalog and compile data about the role of government in the financial sector around the world, and compare and evaluate their practices and efficacy. Governments play a central role in financial markets everywhere, both as allocators of capital and risk and as regulators, but those activities have never been systematically inventoried, nor have differences between countries been explained and analyzed.
Project on measures of systemic risk and systemic risk dashboard. The adage that “one cannot manage what one does not measure” motivates the need for quantitative metrics of systemic risk in the financial system. However, there is no consensus yet on a single definition of systemic risk, hence multiple measures have been proposed in the recent finance and macroeconomics literatures. In this project, we hope to develop intuition for the strengths and weaknesses of these measures by comparing their empirical properties using historical data and judging their performance along several dimensions including their ability to forecast crises, the number of false positives they generate, and their incremental value above and beyond traditional measures of aggregate risk. In addition, we are constructing a web-based “Systemic Risk Dashboard” that provides a platform for visual displays of these measures as well as automatic daily updates and other interactive features.
U.S. Credit Data Initiative. We seek to build a credit data platform using data from U.S. government lending agencies. As the world’s largest financial institution (and lender/guarantor), the U.S. government presides over an enormous loan performance database. Unfortunately, it is fragmented across numerous agencies and offices within those organizations, and the data is typically not publicly available. Recent transparency initiatives within government, such as enactment of the Digital Accountability and Transparency Act should facilitate efforts to obtain the desired information.
Project on new approaches to funding biomedical innovation. The process of developing safe and effective drugs has become riskier, lengthier, more expensive, and more difficult to finance with traditional sources such as private and public equity. In some cases, government is the only institution capable of addressing these challenges (e.g., public health), but in other cases, the private sector can take the lead. This project aims to explore the factors that determine which of these two outcomes will occur, whether there are market failures specific to the bio-pharma industry that can explain their current difficulties, and how new financing vehicles and public policy can improve the efficiency of this important industry.
Project on Retirement Finance. Policymakers around the world are faced with myriad financial challenges associated with an aging population. This project aims to apply the tools of finance science and financial engineering to address those challenges. Topics include building better reverse mortgage products, and the financial risks associated with continuing care retirement communities.
Project on Multilateral Financial Institutions and Development Banks. Multilateral financial institutions such as members of the World Bank Group are government-run banks that supply trillions of dollars of capital for infrastructure and other investments in the developing world. Some countries, such as Brazil, fund a large fraction of domestic investments via their development banks. The goals of the project are to develop models to quantify the associated costs and risks, and to compare those findings to information currently used by governments to evaluate these highly opaque entities.
Risk Management Function of the Future Survey. The Center is conducting a longitudinal survey study designed to gain insights about how large U.S. banks are addressing risk. A joint initiative with Grant Thornton LLP, the survey places emphasis on U.S. banks’ reaction to regulatory mandates emanating from governmental responses to the 2008 financial crisis. A complementary piece of this survey focuses on the perceptions of regulators concerning systemic risk and the effectiveness of various regulations.