FES International Research Seminar with Professor Elena Carletti, Bocconi University

The next speaker at the FES International Research Seminar Series was Professor Elena Carletti, Bocconi University.

Elena Carletti is also the Scientific Director of the Florence School of Banking and Finance at the European University Institute, a member of the Advisory Scientific Committee of the European Systemic Risk Board (ESRB) and of the Bank of Italy Committee for Paolo Baffi Lecture Series. Finally, she is a board member of the Fondazione Cassa Di Risparmio di La Spezia and the member of the Board of Directors of Unicredit.Elena’s main research areas are financial intermediation and regulation, corporate governance and sovereign debt.She published in many top journals including Journal of Financial Economics, Journal of Monetary Economics, Journal of Economic Theory.
At the FES International Research Seminar professor presented joint research "The Price of Law: The Case of the Eurozone Collective Action Clauses" (Paolo Colla, Mitu Gulati, and Steven Ongena).

The abstract: We analyze the price effect of the introduction of Collective Action Clauses (CACs) in all newly issued sovereign bonds of Eurozone countries as of January 1, 2013. By allowing a majority of creditors to modify payment obligations, such clauses reduce the likelihood of holdouts while facilitating strategic default by the sovereign. Using a unique matching methodology, we find that CAC bonds trade, in the secondary market, at lower yields than otherwise similar no-CAC bonds. Such yield differential widens in countries with worse ratings and in hose with stronger legal systems. The results suggest that Euro CACs are seen as pro-creditor provisions.

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The FES International Research Seminar organisers are: Alexander Tarasov (Ph.D, Associate Professor, Head of Department of theoretical economics FES HSE) and Levent Celik (Ph.D, Associate Professor, Department of theoretical economics FES HSE)