Financial Regulation Seminar w. Kathryn Judge (Columbia University)

Kathryn Judge will visit Center for Corporate Governance as the second seminar guest in our Financial Regulation Series to talk about “Information Gaps and Shadow Banking”.

Time: November 18, 2015 at 4:30 pm
Place: Copenhagen Business School, Porcelænshaven 22, 2000 Frederiksberg, Room 4.17

Please register your attendance by sending an e-mail to

Kathryn Judge is an Associate Professor of Law and the Milton Handler Fellow at Columbia Law School, New York. Her research examines financial institutions, financial innovation, systemic risk, the Federal Reserve, and the role of intermediaries in the financial markets. She has published numerous articles in journals including the University of Chicago Law Review and Stanford Law Review.

Abstract: A financial system is fragile when small shocks can trigger large effects. The 2007-2009 financial crisis revealed the shadow banking system to be exceptionally fragile and capable of bringing down the rest of the financial system, yet the reasons for this fragility remain incompletely understood. This paper provides new insights into the mechanisms through which small shocks can trigger significant market dysfunction in the shadow banking system and the challenges impeding efforts to design a regulatory regime capable of supporting shadow banking.

This paper argues that information gaps—pockets of pertinent and knowable information that is not actually known to any party, private or public—contribute to fragility and help to explain the systemic risk posed by shadow banking.It makes two claims. First, there are structural reasons to expect sizeable information gaps in the shadow banking system. Second, those information gaps make panics more likely and exacerbate the magnitude of market dysfunction likely to arise from a panic.

In undertaking the structural analysis required to identify information gaps, the paper also sheds light on why attempts to reform the shadow banking system have been so contentious and unproductive thus far. The shadow banking system is a true hybrid. It earns its “shadow” status because it operates in the capital markets, and therefore outside the prudential regulatory regime that governs banks. Yet it also merits its status as a “banking system” because it performs many of the economic functions historically fulfilled by the banking system and poses similar threats to systemic stability. In situating the shadow banking system at the nexus of these two historically distinct regimes, the analysis helps explain why policymakers and other experts often come to the table with different, and sometimes contradictory, assumptions about how markets work and how regulation can most effectively promote market functioning. By laying this foundation, clarifying how shadow banking contributes to fragility, and identifying ways to reduce that fragility, the paper also forges the beginnings of a more productive path forward.

The paper and the presentation slides are available here:

Financial Regulation Seminar w. Daniel Awrey (Oxford)

At the very first seminar in our Financial Regulation Series, Daniel Awrey will visit Center for Corporate Governance to talk about “The Mechanisms of Derivatives Market Efficiency”.

Time: October 20, 2015 at 4 pm
Place: Copenhagen Business School, Porcelænshaven 22, 2000 Frederiksberg, Room 4.17 

Please register your attendance before October 16 by sending an e-mail to

Dan Awrey is an Associate Professor of Law and Finance at the University of Oxford and Academic Director of the MSc in Law and Finance programme.  Dan’s teaching and research interests reside in the area of financial regulation and, more specifically, the regulation of banks, investment funds, derivatives markets, and financial market infrastructure.

Abstract: Gilson and Kraakman (1984) provide a causal framework for understanding how information becomes incorporated into security prices.  This framework has gone on to play an influential role in public policy debates surrounding securities fraud litigation, mandatory disclosure requirements, and insider trading restrictions.  It has also provided a basis for understanding the economic role of securities underwriters and other reputational intermediaries.  Yet despite its enduring influence, there have been few serious attempts to extend Gilson and Kraakman’s framework beyond the relatively narrow confines in which it was originally developed: the highly regulated, order-driven, and relatively liquid markets for publicly-traded stocks.

This article examines the mechanisms of derivatives market efficiency.  These mechanisms respond to information and other problems not generally encountered within public equity markets.  These problems reflect important differences in the nature of derivatives contracts, the structure of the markets in which they trade, and the sources of market liquidity.  Predictably, these problems have lead to the emergence of very different mechanisms of market efficiency.  This article describes these problems and evaluates the relative effectiveness of the mechanisms of derivatives market efficiency.  It then explores the implications of this evaluation in terms of the current policy debates around mandatory derivatives trade reporting, the push toward central clearing of standardized derivatives, dealer capital and liquidity regulation, and the optimal balance between public and private ordering within derivatives markets.

The paper is available here:

Business Seminar w. Arturo Bris (IMD)

Professor Arturo Bris (IMD) will be talking about competiveness and the financial sector in the Nordic countries, which will lead up to a panel discussion.

Arturo Bris is an extraordinary speaker and we strongly encourage you and your fellow colleagues to join this event.

The invitation including a program is found below.

Vacant PostDoc position within the area of Financial Regulation

Center for Corporate Governance at Copenhagen Business School invites applications for a vacant PostDoc position within the area of Financial Regulation. The position is designed for an academic candidate with an outstanding potential at an early stage of the academic career wishing to specialize in the field of Financial Regulation. The postdoc is a non-tenured position with research obligation for a 3 year period starting from 1 December 2015. 

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Are you interested in writing your Master’s Thesis as part of our research project?

Center for Corporate Governance (CCG), Department of International Economics and Management, CBS, is looking for 4 stud.cand.merc students who are interested in writing their Master’s Thesis as a part of our large, ground-breaking research project Nordic Finance and the Good Society.

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CBS: A DKK 10 million donation ensures focus on the future financial sector

Raising money on the internet via crowdfunding is a popular strategy, but what does this mean for other players in the market, such as banks, who experience less demand for larger loans? How do you ensure that the new wave of small and medium-sized companies in Denmark that have to create growth and jobs have access to the stock market, just as large companies have?

These are just a few of the many questions that a new research project, led by CBS’ Center for Corporate Governance, will work on over the next four years. The project has been made possible through a donation of DKK 10 million and has a total budget on DKK 15 million.

Læs mere CBS: A DKK 10 million donation ensures focus on the future financial sector