Question A:
Non-bank financial intermediaries pose a substantial threat to financial stability.
Responses
Responses weighted by each expert's confidence
Question B:
Regulating the leverage and liquidity of non-bank financial intermediaries would substantially improve financial stability.
Responses
Responses weighted by each expert's confidence
Question C:
Given current regulations, non-bank financial intermediaries should not have access to central bank support.
Responses
Responses weighted by each expert's confidence
Question A Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
 Daron Acemoglu |
MIT | Bio/Vote History | ||
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 Joseph Altonji |
Yale | Did Not Answer | Bio/Vote History | |
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 Alan Auerbach |
Berkeley | Bio/Vote History | ||
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 David Autor |
MIT | Bio/Vote History | ||
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 Abhijit Banerjee |
MIT | Bio/Vote History | ||
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 Marianne Bertrand |
Chicago | Bio/Vote History | ||
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 Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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 Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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 Judith Chevalier |
Yale | Bio/Vote History | ||
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 David Cutler |
Harvard | Did Not Answer | Bio/Vote History | |
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 Angus Deaton |
Princeton | Bio/Vote History | ||
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 Darrell Duffie |
Stanford | Bio/Vote History | ||
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Sudden defaults or unwind risk can destabilize financial markets. Consider for example the leverage-driven investors than destabilized the gilt market in September 2022.
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 Aaron Edlin |
Berkeley | Bio/Vote History | ||
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 Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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 Liran Einav |
Stanford | Bio/Vote History | ||
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 Ray Fair |
Yale | Bio/Vote History | ||
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 Amy Finkelstein |
MIT | Did Not Answer | Bio/Vote History | |
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 Pinelopi Goldberg |
Yale | Did Not Answer | Bio/Vote History | |
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 Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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 Robert Hall |
Stanford | Bio/Vote History | ||
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Only because of unwise implicit government bailout policies.
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 Oliver Hart |
Harvard | Bio/Vote History | ||
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 Bengt Holmström |
MIT | Bio/Vote History | ||
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 Caroline Hoxby |
Stanford | Did Not Answer | Bio/Vote History | |
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 Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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 Kenneth Judd |
Stanford | Bio/Vote History | ||
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Any firm that finances illiquid long-run investments with liquid short-run liabilities runs the risks of failure which then makes runs more likely.
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 Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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In one case, direct lending / private credit, stability has been improved because it has moved from highly leveraged, duration mismatched banks to less leveraged, duration matched funds. Uncertain, because you never know what else is out there.
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 Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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How many times do some of these entities need to get bailed out before we find a way to improve their resilience and the regulatory tools to address future problems?
-see background information here |
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 Pete Klenow |
Stanford | Bio/Vote History | ||
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 Jonathan Levin |
Stanford | Bio/Vote History | ||
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 Eric Maskin |
Harvard | Bio/Vote History | ||
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We saw such a threat play out when AIG got into trouble during the financial crisis of 2008-9
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 William Nordhaus |
Yale | Bio/Vote History | ||
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 Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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 Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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 Larry Samuelson |
Yale | Bio/Vote History | ||
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 José Scheinkman |
Columbia University | Bio/Vote History | ||
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 Richard Schmalensee |
MIT | Bio/Vote History | ||
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 Carl Shapiro |
Berkeley | Bio/Vote History | ||
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 Robert Shimer |
University of Chicago | Bio/Vote History | ||
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 James Stock |
Harvard | Did Not Answer | Bio/Vote History | |
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 Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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 Christopher Udry |
Northwestern | Bio/Vote History | ||
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Question B Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
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Daron Acemoglu |
MIT | Bio/Vote History | ||
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It is strange and inefficient to have a series of regulations for banks, but so little for non-bank financial intermediaries. This asymmetry would likely become more consequential with decentralized finance and digital assets.
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Joseph Altonji |
Yale | Did Not Answer | Bio/Vote History | |
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Alan Auerbach |
Berkeley | Bio/Vote History | ||
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David Autor |
MIT | Bio/Vote History | ||
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Abhijit Banerjee |
MIT | Bio/Vote History | ||
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Marianne Bertrand |
Chicago | Bio/Vote History | ||
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Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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Judith Chevalier |
Yale | Bio/Vote History | ||
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Given the innovation, it seems challenging for regulation to truly keep pace.
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David Cutler |
Harvard | Did Not Answer | Bio/Vote History | |
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Angus Deaton |
Princeton | Bio/Vote History | ||
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Darrell Duffie |
Stanford | Bio/Vote History | ||
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I bear in mind that the question considers only the undoubted benefit of regulation, financial stability, with which I strongly agree, and does not ask about any associated costs.
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Aaron Edlin |
Berkeley | Bio/Vote History | ||
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Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Liran Einav |
Stanford | Bio/Vote History | ||
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Ray Fair |
Yale | Bio/Vote History | ||
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Amy Finkelstein |
MIT | Did Not Answer | Bio/Vote History | |
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Pinelopi Goldberg |
Yale | Did Not Answer | Bio/Vote History | |
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Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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Robert Hall |
Stanford | Bio/Vote History | ||
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It seems almost impossible to get the regulators to function
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Oliver Hart |
Harvard | Bio/Vote History | ||
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Bengt Holmström |
MIT | Bio/Vote History | ||
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Caroline Hoxby |
Stanford | Did Not Answer | Bio/Vote History | |
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Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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Kenneth Judd |
Stanford | Bio/Vote History | ||
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Regulations often have loopholes that these firms will find and exploit.
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Again, move to direct lending / private credit has improved stability by moving from banks. More regulation would hurt. Uncertain, because it is a very broad question.
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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This could help, but details matter, especially which entities and markets are covered and how. Substantial is a high bar.
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Pete Klenow |
Stanford | Bio/Vote History | ||
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Jonathan Levin |
Stanford | Bio/Vote History | ||
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Eric Maskin |
Harvard | Bio/Vote History | ||
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William Nordhaus |
Yale | Bio/Vote History | ||
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Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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Larry Samuelson |
Yale | Bio/Vote History | ||
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We regulate banks for good reasons, that are also good reasons for regulating non-bank financial institutions.
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José Scheinkman |
Columbia University | Bio/Vote History | ||
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Richard Schmalensee |
MIT | Bio/Vote History | ||
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Carl Shapiro |
Berkeley | Bio/Vote History | ||
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Robert Shimer |
University of Chicago | Bio/Vote History | ||
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This is a game of whack-a-mole. Leverage will pop up in some unregulated sector.
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James Stock |
Harvard | Did Not Answer | Bio/Vote History | |
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Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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Christopher Udry |
Northwestern | Bio/Vote History | ||
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Question C Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
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Daron Acemoglu |
MIT | Bio/Vote History | ||
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The moral hazard problem is clear in this case.
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Joseph Altonji |
Yale | Did Not Answer | Bio/Vote History | |
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Alan Auerbach |
Berkeley | Bio/Vote History | ||
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David Autor |
MIT | Bio/Vote History | ||
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Abhijit Banerjee |
MIT | Bio/Vote History | ||
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Marianne Bertrand |
Chicago | Bio/Vote History | ||
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Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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When crisis erupts they might get access anyways ex-post to avoid a deeper crisis. It is difficult for the Fed to commit not to grant ex-post access.
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Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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Judith Chevalier |
Yale | Bio/Vote History | ||
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It is hard to imagine that there arent (possibly penal) terms at whoch it might sometimes make sense.
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David Cutler |
Harvard | Did Not Answer | Bio/Vote History | |
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Angus Deaton |
Princeton | Bio/Vote History | ||
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Darrell Duffie |
Stanford | Bio/Vote History | ||
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Hard call. Obvious benefits and obvious costs. Except in extreme emergencies, central banks should provide last-resort lending to regulated firms.
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Aaron Edlin |
Berkeley | Bio/Vote History | ||
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Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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Liran Einav |
Stanford | Bio/Vote History | ||
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Ray Fair |
Yale | Bio/Vote History | ||
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Amy Finkelstein |
MIT | Did Not Answer | Bio/Vote History | |
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Pinelopi Goldberg |
Yale | Did Not Answer | Bio/Vote History | |
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Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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Robert Hall |
Stanford | Bio/Vote History | ||
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The big problem seems to be access to bailouts, not lending
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Oliver Hart |
Harvard | Bio/Vote History | ||
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Bengt Holmström |
MIT | Bio/Vote History | ||
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Caroline Hoxby |
Stanford | Did Not Answer | Bio/Vote History | |
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Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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Kenneth Judd |
Stanford | Bio/Vote History | ||
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It is difficult for the central bank to commit to such policies.
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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Blanket bad would involve taking a lot of risk, much better to work on fixing the regulations and making the regulatory system more flexible.
-see background information here |
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Pete Klenow |
Stanford | Bio/Vote History | ||
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Jonathan Levin |
Stanford | Bio/Vote History | ||
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Eric Maskin |
Harvard | Bio/Vote History | ||
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The ability to bail AIG out was important to financial stability in 2008-9
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William Nordhaus |
Yale | Bio/Vote History | ||
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There are different kinds of support that might improve financial stability without incurring excessive moral hazard.
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Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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Larry Samuelson |
Yale | Bio/Vote History | ||
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There is a delicate trade-off between the moral hazard created by central bank support of non-banks and the increased fragility induced by the lack of support. Support at some but a lower level would be a reasonable compromise.
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José Scheinkman |
Columbia University | Bio/Vote History | ||
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However CBs may find it difficult to deny access to a non-bank financial institution unable to fulfill commitments.
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Richard Schmalensee |
MIT | Bio/Vote History | ||
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Not sure why this would be stabilizing.
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Carl Shapiro |
Berkeley | Bio/Vote History | ||
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Robert Shimer |
University of Chicago | Bio/Vote History | ||
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It would be great to commit to this, but the policy is time inconsistent.
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James Stock |
Harvard | Did Not Answer | Bio/Vote History | |
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Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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Christopher Udry |
Northwestern | Bio/Vote History | ||
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