Credit card interest rates average 23%, far exceeding rates on other major loan or bond types. To understand the drivers of these high rates and the economics of credit card banking, we analyze regulatory account-level data on 330 million monthly accounts, representing 90% of the US credit card market. While high default rates partially explain high card interest rates, netting these out still leaves an average interest spread of 10%. Non-interest expenses, including rewards, are more than offset by corresponding non-interest income. Operating costs are large, suggesting a significant role for market power, and explain a sizable part of rate spreads. Yet even after subtracting them, banks' return on credit card lending is over four times their average return on assets. Using the cross section of accounts by default risk, we estimate a price of default risk. We find it is similar to that in high-yield bonds, and implies the average card borrower pays a 4.2% risk premium. Yet, there remains a substantial zero-beta rate of 3% that is unexplained by risk and specific to credit card lending.

We develop a methodology to determine which days are "equity premium events": events with significantly elevated equity premia relative to the daily equity term structure. To do so, we use recently available daily S&P 500 option expirations and forward analogs of option-implied ex ante measures of the equity premium. We use a data-driven approach to identify events that are significantly priced without taking a stance on what those events are. A variety of individual events are associated with significantly elevated equity premia. Among macroeconomic releases, FOMC, CPI, and nonfarm payrolls have the largest abnormal equity premia, which increase substantially between June 2022 and June 2023. However, the elevated equity premia on macroeconomic release days account for a significantly smaller share of total expected returns compared to previous estimates using realized excess returns. To provide intuition for the significant variation in equity premia across announcement types and time, we propose an asset pricing framework that decomposes the equity premium for a given macroeconomic release into components due to news variance and the sensitivities of the stock market and the SDF to the news released.

We propose a new methodology to estimate the equity term structure, based on the cross-section of stock prices and the implied cost of capital approach. Specifically, instead of focusing on the realized returns of maturity-specific dividend assets, we imply the term structure of expected returns based on observed market prices and projected firm-level cash flows. Using US data for 1980-2021, we find an unconditionally upward sloping term structure of risk premia with rich cross-sectional patterns. Namely, large and growth firms exhibit an upward sloping term structure, whereas the smallest and value firms mostly have a downward sloping term structure. We also detect that the slope of the term structure changes from negative to positive in the late 1990s for the largest firms, as well as that the slope tends to flatten out or even invert in recessions. Thus, using a direct measure of ex-ante returns, we are able to provide new evidence on the debated properties of the equity term structure.