This paper rethinks how financial regulators should design stress tests. Rather than treating stress testing as a pass/fail assessment, the authors show it should be viewed as an exercise in information gathering. Designing Risk Scenarios was originally published at Alpha Architect. Please read the Alpha Architect disclosures at your convenience.| Alpha Architect
Rather than streamlining oversight, overlapping mandates between regulatory agencies create confusion, redundancy, and sometimes outright inconsistency. Regulatory fragmentation drags down efficiency. was originally published at Alpha Architect. Please read the Alpha Architect disclosures at your convenience.| Alpha Architect
A longstanding belief in market finance is that short-term funding markets like repo are relatively stable and transparent. But this new research turns that idea on its head. Leverage is dangerous if you can’t borrow in a crisis was originally published at Alpha Architect. Please read the Alpha Architect disclosures at your convenience.| Alpha Architect
This paper explores how value, momentum, low-risk, and size factors explain differences in corporate bond returns across firms and over time.| Alpha Architect
Younger and less-wealthy individuals are more prone to increasing their exposure to riskier assets in low-interest environments. Investors experiencing losses are more likely to seek higher yields.| Alpha Architect
Over 75% of the cross-sectional variation in P/E ratios is driven by future return differences, not growth expectations. This challenges many common asset pricing models and changes how investors should think about value, growth, and long-term return forecasting.| Alpha Architect
Increased executive effort correlates with positive earnings surprises, higher cumulative abnormal returns post-earnings announcements, and narrower credit default swap spreads. Moreover, portfolios constructed based on changes in executive effort demonstrate significant risk-adjusted returns, underscoring the tangible value of diligent leadership.| Alpha Architect