OMDS Finance Seminar

(formerly Brown Bag Seminar)

Department members are encouraged to regularly present current research and research ideas at an early stage in the weekly departmental lunch seminar. Occasionally, cooperation partners are also invited to present their work in progress. The seminar is organised by our post-docs. Students of the master's program in Banking and Finance are welcome to attend.

Upcoming Seminars in WS 2025/2026

Speaker: Alessio Ozanne (University of Vienna)
Title: Agents under Pressure: Risk Governance under Preemptive Competition (with Matthieu Bouvard and Samuel Lee)
Time: Wednesday, Jan. 28, 12 – 1 pm
Location: Seminar Room 6 (1-floor), OMP-1
Abstract: Many markets feature competition on speed alongside the need to screen and control risk. We study a model in which agents race to identify trading opportunities while being incentivized both to search and to comply with firms’ internal risk-management protocols. Preemptive competition interacts with agency problems to generate robust constrained inefficiencies, manifested in deal-driven front-office cultures that firms may be unwilling to coordinate away from, because doing so would require paying higher agency rents. Because competition and compliance are jointly determined by agents’ contracts, compensation regulation emerges as a natural corrective instrument. Advances in artificial intelligence (AI) can aggravate or mitigate the incentive problem. If AI replaces human agents, the laissez-faire outcome may improve, but it may still be inferior to an outcome in which firms’ behavior is constrained by compensation regulation.

Speaker: Sonny Biswas (University of Reading)
Title: The Dichotomy of Concentration and Market Power in Banking (joint with Kostas Koufopoulos)
Time: Wednesday, Oct. 15, 12 – 1 pm
Location: Seminar Room 6 (1-floor), OMP-1
Abstract: In our model, banks face two informational frictions: limited pledgeability and effort moral hazard. Banks possess pricing power in the deposit market despite (cost-less) free entry and price competition – unlike in existing models, including those featuring capacity constraints. When pledgeability increases, banks can offer higher deposit rates and accept more deposits, which, in turn, leads to fewer banks. Thus, counterintuitively, but consistent with empirical evidence, equilibrium pricing power may decline as the number of banks falls (concentration increases). The markup exceeds the rent associated with either informational constraint alone and ranges between the monopoly and perfect competition outcomes.

Speaker: Sheran Deng (University of Vienna)
Title: (Counter)productive Responsible Capital in the Presence of Financial Frictions (with Tom Lee, CEU)
Time: Wednesday, Nov. 5, 12 – 1 pm
Location: Seminar Room 6 (1-floor), OMP-1
Abstract: We study the role of responsible investors in financing entrepreneurs who can develop projects with varying degrees of abatement abilities. When the planner is unconstrained in setting tax and subsidy, responsible capital does not affect the allocation in the absence of financial frictions. However, in the presence of financial frictions, responsible capital can worsen the allocation. Even with an arbitrarily small degree of aggregate social concern, there may no longer exist tax/subsidy rates that simultaneously provide incentives to entrepreneurs to develop the right projects ex ante and shareholders to make the right abatement decisions ex post. We (1) derive conditions for when responsible capital is beneficial; (2) the optimal distribution of social concern; (3) optimal policy choice.

Speaker: David Rivero (University of Navarra)
Title: Endogenous Bank Risks and the Lending Channel of Monetary Policy
Time: Wednesday, Nov. 19, 12 – 1 pm
Location: Seminar Room 6 (1-floor), OMP-1
Abstract: This paper develops a general equilibrium banking model where credit creation and payment flows endogenously link credit, liquidity, and solvency risks. Banks issue deposits at loan origination. As deposits circulate, reserve settlement creates liquidity exposure and repayment shortfalls generate credit and solvency risk. These risks are jointly determined by credit provision and bound balance sheet expansion at an internally determined profitability threshold rather than an external funding or capital limit. We present an application of the theory that provides a new look to the bank lending channel where monetary policy operates through the pricing of bank liabilities, compressing margins and curbing credit. Our quantitative results align with empirical observations, including comovement of policy rates with deposit spreads and net interest margins and a decline in deposit growth after tightening. The mechanism speaks to policy: calibrating liquidity and capital tools in isolation can blunt their effectiveness.

Speaker: Yuliyan Mitkov (University of Vienna)
Title: Bailouts and Financial Fragility Revisited
Time: Wednesday, Nov. 26, 12 – 1 pm
Location: Seminar Room 6 (1-floor), OMP-1
Abstract: Governments often respond to financial crises with fiscal transfers (“bailouts”) that partially cover investors' losses. When should such bailouts be constrained? We show that—even when ex-post bailouts are efficient and ex-ante moral hazard is fully corrected—allowing bailouts can increase the incidence of runs and reduce ex-ante welfare. This outcome arises when the government's fiscal capacity is limited, so anticipated bailouts are small, and is due to a novel interaction between endogenous run risk and limited commitment, which makes the financial system more prone to runs. Our model suggests that recent developments in the U.S. and elsewhere, which effectively unwind too-big-to-fail legislation, are likely to lead to financial instability.

Speaker: Can Gao (University of St.Gallen)
Title: No News is News: Volatility Speculation and Multidimensional Heterogeneous Beliefs
Time: Wednesday, Jan. 14, 12 – 1 pm
Location: Seminar Room 6 (1-floor), OMP-1
Abstract: This paper develops a theoretical model to explore the asset pricing implications of investors’ multi-dimensional belief heterogeneity, specifically distinguishing between disagreements over the frequency of news arrival and the content of news. Besides directional trades, investors could use derivatives to bet against each other and speculate on volatility: greater disagreement of this kind could give rise to more extreme derivative positions. When disagreement about news arrival frequency is low, volatility exhibits mean reversion because extreme optimists and pessimists incur substantial wealth losses amid intense market swings. In contrast, high disagreement about the news arrival rate leads to volatility persistence. If news is absent in such environments, volatility sellers dominate, and extreme payoffs are underweighted in the formation of market expectations, resulting in lower implied volatility—“no news” effectively becomes good news for risky asset valuations.

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Past Seminars in WS 2024/2025

Speaker: Sapnoti Eswar (University of St. Andrews)
Title: Cross-border Patenting and Corporate Debt Capacity
Time: Wednesday, Oct. 9, 12 – 1 pm
Location: Seminar Room 6, OMP-1
Abstract: We use global patent data and exploit the staggered adoption of the Patent Prosecution Highway, a patent examination cooperation program to evaluate the effect of globalization of patents on debt capacity of firms. We show that patents filed globally are of higher quality, and loans to patenting firms increases. This increase is driven by a reduction in information asymmetry in global lending markets. We also find that firms obtain international loans in low-tax countries which leads to a lower average tax burden. This lower burden creates a higher debt capacity for patenting firms.

Speaker: Andrew Winton (University of Minnesota)
Title: Slippery Slope or Tip of the Iceberg? A Model of Detected and Undetected Financial Misreporting (co-authored with Xiaoyun Yu)
Time: Wednesday, Oct. 23, 12 – 1 pm
Location: Seminar Room 6, OMP-1
Abstract: Recent empirical work suggests that most financial misreporting is undetected, so that detected cases are just "the tip of the iceberg". At the same time, based on a sample of detected cases, Schrand and Zechman (2012) argue for a “slippery slope” to fraud, where managers initially engage in relatively unintentional misreporting due to excessive optimism about firm prospects, and then are forced to misreport more and more when those prospects fail to materialize. We present a dynamic model of financial misreporting that combines slippery slope ideas with the problem of imperfect fraud detection. Although excessive optimism can magnify the problem, one can get the observed patterns even in the presence of perfectly rational managers and investors.

Speaker: Francesco Sannino (Frankfurt School of Finance and Management)
Title: Committing to Trade: A Theory of Intermediation
Time: Wednesday, Nov. 13, 12 – 1 pm
Location: Seminar Room 6, OMP-1
Abstract: In a “lemons” market, a shock to gains from trade is publicly observed just before buyers make their offer. When gains from trade are lower, prices contain a larger adverse selection discount. By trading with intermediaries beforehand, sellers commit not to keep high-quality assets in such states, which may improve surplus, despite impeding efficient use of available information. The distribution of agents' valuations and the level of uncertainty in gains from trade affect intermediaries' markups, traded assets' quality and volumes. In the optimal contract, intermediaries (inefficiently) ration buyers when gains from trade are lowest, as documented in the leveraged loans market.

Speaker: Sheran Deng (University of Vienna)
Title: A Model of Climate Change Mitigation and Adaptation Finance
Time: Wednesday, Dec. 11, 12 – 1 pm
Location: Seminar Room 6, OMP-1
Abstract: One of the biggest challenges in addressing the climate crisis is that poorer regions, which suffer the most from pollution caused by wealthier regions, often lack the resources to invest in mitigation and adaptation. How much mitigation and adaptation funding will wealthy regions provide? Will they prioritize divestment or funding mitigation and adaptation? What policies will planners adopt? In this paper, we develop a model to explore these questions.

Speaker: Christian Westheide (University of Vienna)
Title: How Standardizing Corporate Environmental Sustainability Information Reshapes Mutual Fund Green Investing: Evidence from the EU Taxonomy (joint with Sheran Deng - University of Vienna, and Li Gu - Fed Board)
Time: Wednesday, Dec. 18, 12 – 1 pm
Location: Seminar Room 6, OMP-1
Abstract: The EU Green Taxonomy regulation standardizes criteria for assessing the environmental performance of business activities and mandates public corporations to disclose their performance against this benchmark. We track mutual fund investing in EU firms throughout the implementation of the first phase of the taxonomy (related to climate change) from 2020 to 2023. We find that green funds reallocate portfolios towards high taxonomy-score firms. However, some green funds change to brown labels and they allocate portfolios away from high taxonomy-score firms during their exit from green labels. Ex-ante, these transitioning funds’ portfolios were less aligned with the taxonomy before the disclosure. As brown funds appear to move away from high taxonomy-score firms, we find no significant increase in aggregate holdings by both green and brown funds of high taxonomy-score firms, nor abnormal positive price reactions for the high taxonomy-score firms, suggesting adjustments by green and brown funds taken together may not benefit high taxonomy-score firms.

Speaker: Dongliang Lu (Sauder School of Business, University of British Columbia)
Title: Value-Destroying Activism
Time: Wednesday, Jan. 29, 12:00 – 1:30 pm
Location: Seminar Room 6, OMP-1
Abstract: I develop a dynamic agency model to study how activism affects firms’ governance. I show that while activism enhances shareholder value ex-post, it destroys value ex-ante by undermining shareholders’ ability to commit to governance policies. Existing shareholders respond to the threat of activism by replacing performance pay with monitoring after poor performance and relying less on deferred compensation. When the threat of activism is low, a rise in activism levels results in increased ex-post interventions and CEO turnover, while a high threat of activism leads to such stringent monitoring that interventions become unnecessary and the need for CEO turnover is redundant. The non-monotonic relationship between ex-ante and ex-post intervention frequencies suggests that the maximal level of deferred compensation, rather than observed interventions, is the appropriate empirical proxy for measuring the threat of activism.

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