Conference Agenda

In this paper, we examine how dividend taxes (and bans) and capital requirements that vary with the state of the economy influence a bank’s optimal capital buffers and shareholder value. In the model, the bank distributes dividends and issues costly equity to maximise shareholder value, while its assets generate stochastic income under time-varying macroeconomic conditions. We solve the bank’s stochastic control problem and derive the distribution of its capital buffers in closed form. Imposing dividend taxes (or bans) in bad macroeconomic states generates an intertemporal trade-off, as it encourages capital buffers accumulation in those states but promotes dividend payouts in the good ones. Furthermore, the policy undermines financial stability by reducing the bank’s value and weakening its incentives to recapitalise in both good and bad states. Coordinating dividend taxes with counter-cyclical capital requirements can mitigate value losses and ease the trade-off, but it also exacerbates disincentives for recapitalisation.

We examine how a lender of last resort (LLR) and liquidity regulation jointly shape bank fragility when both liquidity and debt pricing are endogenous. In a global-games model of rollover risk, a bank’s ex-ante fragility—the probability of a run—depends on how liquidity choices interact with the pricing of short-term debt. We show that LLR policy on its own can backfire: by reducing incentives to self-insure with liquid reserves, it raises debt burdens and amplifies fragility. Minimum liquidity requirements counteract this effect by strengthening balance-sheet resilience and making central-bank support more targeted. Together, the two instruments deliver greater stability and welfare than either in isolation. The analysis highlights a new micro-prudential role for liquidity regulation—enhancing the social value of the LLR.

This paper examines how financial regulation and institutional quality jointly determine agricultural innovation across 48 Sub-Saharan African (SSA) countries over 2000–2022, a region largely absent from the empirical finance-innovation literature. We construct composite indices of regulatory quality, financial regulation, and agricultural innovation following WIPO methodology (Dutta et al., 2023), and employ a methodological triad of fixed-effects, two-step System GMM, and PLS-SEM to address unobserved heterogeneity, endogeneity, and mediation pathways simultaneously.

Fixed-effects results show that the Financial Regulation Index (β = 0.033, p < 0.05) and Institutional Regulation Index (β = 8.685, p < 0.01) significantly promote innovation. When financial regulation is disaggregated, financial depth (β = 0.216, p < 0.01) and financial stability (β = 0.026, p < 0.01) emerge as the dominant channels. System GMM confirms strong persistence in innovation (ρ = 0.787, p < 0.01), consistent with the cumulative, path-dependent nature of technological adoption. PLS-SEM decomposes institutional quality effects into a direct innovation impact (β = 0.328) and a significant indirect pathway operating through financial depth (β_indirect = 0.187), with large effect sizes (f² > 0.35) for both constructs.

These results challenge conventional sequentialist approaches by showing that financial depth, not the breadth of financial inclusion, constitutes the binding constraint on agricultural innovation in Sub-Saharan Africa. This shifts the policy focus toward the efficiency and intermediation capacity of financial systems. The findings carry direct implications for regulators and development finance institutions, emphasizing the need to deepen credit markets, enhance land collateralization through secure tenure systems, and calibrate regulatory frameworks to sector-specific risks. Strengthening financial intermediation thus emerges as a key channel through which regulation can support innovation and structural change.

We study the interplay between Federal Reserve communication on banking regulation and

U.S. bank equity anomaly returns. Using 124 anomaly characteristics and Natural Language

Processing techniques, we document amplified anomaly premia in the cross-section of bank

stocks, largely driven by market reactions to pro-regulation speeches. Such speeches generate a

daily return premium of 0.51 percent for banks at the extreme ends of anomaly characteristics.

The effect reflects a decline in risk premia for more opaque banks with illiquid shares and does

not appear among non-banks. Overall, regulatory communication emerges as a distinct and

meaningful determinant of banks’ cost of equity.