Hello and welcome to my website! I'm a research advisor at Bank of Canada. My research interests are in macro-finance, corporate finance and managerial accounting.  Specific topics are bank regulation, capital structure and disclosure choice.


CV

Email: jschroth@bankofcanada.ca


Research Papers

Regulators should raise bank profitability following a financial crisis to alleviate concerns about bank moral hazard during the crisis. Crises are then less deep but recoveries also take longer.

Firm owners pay managers to run firms, but not all pay depends on performance. Some of it depends on how managers communicate with market participants.

Optimal capital buffers should be large eventually but small in the aftermath of financial crises such that their anticipation does not affect adversely market participants' expectations about bank moral hazard during crises.

An important class of financial crisis policy responses provides temporary support to solvent institutions, following Bagehot's principle. The paper analyzes general equilibrium effects from such policy responses and finds that they redistribute from poor to wealthy households.

Foreign direct investment inflows and overall capital outflows are positively related to growth across developing countries when consumer borrowing limits are tighter in developing countries than in developed countries.

To avoid moral hazard of national macroprudential regulators, the usage of resolution funding should be positively correlated across member countries of a banking union. Optimal policies imply time-varying financial stability and economic output that is on average higher net of resolution costs.


Banks hold costly capital and earn revenue from providing liquidity services. This revenue is affected by both monetary and macroprudential policy. Optimal coordination of policies implies (i) higher risk weights on (safe) bonds during any time that banks are required to hold additional capital buffers, and (ii) a tighter monetary-policy stance during any time when such capital buffers are released.

Will banks use capital buffers to maintain lending during financial crises? Macroprudential bank regulators can address a time-consistency problem by relying more on time-varying, and less on static, capital buffers.

       

Policy contributions

This note illustrates how insights for macroprudential policy can be obtained from a parsimonious structural model that endogenizes key elements of the financial system (funding market pressure, financial crises, banks’ dividend policy and voluntary capital buffers).


Discussions


Conferences