All Outputs (19)

Financial Complexity, Cycles and Income Inequality (2025)
Journal Article
Bougheas, S., Commendatore, P., Gardini, L., Kubin, I., & Zörner, T. O. (in press). Financial Complexity, Cycles and Income Inequality. Macroeconomic Dynamics,

We introduce a banking sector and heterogeneous agents in the dynamic overlapping generations model of Matsuyama et al. (2016). Our model captures the benefits and costs of an advanced banking system. While it allocates resources to productive activi... Read More about Financial Complexity, Cycles and Income Inequality.

Systemic risk in banking, fire sales, and macroeconomic disasters (2024)
Journal Article
Bougheas, S., Harvey, D. I., Kirman, A., & Nelson, D. (2024). Systemic risk in banking, fire sales, and macroeconomic disasters. Journal of Economic Dynamics and Control, 168, Article 104975. https://doi.org/10.1016/j.jedc.2024.104975

We develop a dynamic computational network model of the banking system where fire sales provide the amplification mechanism of financial shocks. Each period a finite number of banks offers a large, but finite, number of loans to households. Banks wit... Read More about Systemic risk in banking, fire sales, and macroeconomic disasters.

Dynamic Investigations of an Endogenous Business Cycle Model with Heterogeneous Agents (2023)
Journal Article
Bougheas, S., Commendatore, P., Gardini, L., & Kubin, I. (2025). Dynamic Investigations of an Endogenous Business Cycle Model with Heterogeneous Agents. Computational Economics, 65, 665-689. https://doi.org/10.1007/s10614-023-10492-2

We introduce agents'heterogeneity into a model of endogenous business cycles, in which agents can invest either in 'good'projects that contribute to future capital formation, or in 'bad' projects without that property. The resulting map involves thre... Read More about Dynamic Investigations of an Endogenous Business Cycle Model with Heterogeneous Agents.

Contagion in networks: Stability and efficiency (2021)
Journal Article
Bougheas, S. (2022). Contagion in networks: Stability and efficiency. Mathematical Social Sciences, 115, 64-77. https://doi.org/10.1016/j.mathsocsci.2021.10.006

We study the formation of networks in environments where agents derive benefits from their neighbours (immediate links) but suffer losses through contagion when any agent on a path that connects them is hit by a shock. We first consider networks with... Read More about Contagion in networks: Stability and efficiency.

A Theory of Outside Equity: Financing Multiple Projects (2021)
Journal Article
Bougheas, S., & Wang, T. (2021). A Theory of Outside Equity: Financing Multiple Projects. Journal of Corporate Finance, 69, Article 102025. https://doi.org/10.1016/j.jcorpfin.2021.102025

In the financial economics literature debt contracts provide optimal solutions for addressing managerial moral hazard problems. We analyze a model with multiple projects where the manager obtains private information about their quality after the cont... Read More about A Theory of Outside Equity: Financing Multiple Projects.

Financial System Architecture and the Patterns of International Trade (2021)
Journal Article
Falvey, R., Defever, F., Bougheas, S., & Amissah, E. (2021). Financial System Architecture and the Patterns of International Trade. European Economic Review, 136, Article 103751. https://doi.org/10.1016/j.euroecorev.2021.103751

Countries differ in the extent to which their financial systems rely on banks or on financial markets. We offer a model featuring a complex relationship between countries’ financial system architecture and their comparative advantage. Countries with... Read More about Financial System Architecture and the Patterns of International Trade.

Portfolio sales and signaling (2018)
Journal Article
Bougheas, S., & Worrall, T. (2019). Portfolio sales and signaling. Journal of Banking and Finance, 99, 182-191. https://doi.org/10.1016/j.jbankfin.2018.12.008

This paper extends the DeMarzo and Duffie (1999) signaling model from single sales to portfolio sales. It shows that the extended model can account for retention of low quality assets and help explain why retained assets may be of varying quality.

Foreign currency borrowing, exports and firm performance: evidence from a currency crisis (2018)
Journal Article
Bougheas, S., Lim, H., Mateut, S., Mizen, P., & Yalcin, C. (2018). Foreign currency borrowing, exports and firm performance: evidence from a currency crisis. European Journal of Finance, 24(17), 1649-1671. https://doi.org/10.1080/1351847x.2017.1421246

This paper develops a simple signaling model of foreign currency borrowing that yields predictions about firm survival and performance during a currency crisis. Using a large panel of firm level data for South Korea we offer empirical support for man... Read More about Foreign currency borrowing, exports and firm performance: evidence from a currency crisis.

Systemic risk and the optimal seniority structure of banking liabilities (2018)
Journal Article
Bougheas, S., & Kirman, A. (2018). Systemic risk and the optimal seniority structure of banking liabilities. International Journal of Finance and Economics, 23(1), 47-54. https://doi.org/10.1002/ijfe.1602

The paper argues that systemic risk must be taken into account when designing optimal bankruptcy procedures in general, and priority rules in particular. Allowing for endogenous formation of links in the interbank market we show that the optimal poli... Read More about Systemic risk and the optimal seniority structure of banking liabilities.

Systemic risk and macroeconomic fat tails (2017)
Book Chapter
Bougheas, S., Harvey, D., & Kirman, A. (2018). Systemic risk and macroeconomic fat tails. In P. Commendatore, I. Kubin, S. Bougheas, A. Kirman, M. Kopel, & G. I. Bischi (Eds.), The economy as a complex spatial system (119-136). Springer. https://doi.org/10.1007/978-3-319-65627-4_6

We propose a mechanism for shock amplification that potentially can account for fat tails in the distribution of the growth rate of national output. We argue that extreme macroeconomic events, such as the Great Depression and the Great Recession, wer... Read More about Systemic risk and macroeconomic fat tails.

Do psychological fallacies influence trading in financial markets? Evidence from the foreign exchange market (2017)
Journal Article
Bleaney, M., Bougheas, S., & Zhiyong, L. (2017). Do psychological fallacies influence trading in financial markets? Evidence from the foreign exchange market. Journal of Behavioral Finance, 18(3), 344-357. https://doi.org/10.1080/15427560.2017.1331234

Research in both economics and psychology suggests that, when agents predict the next value of a random series, they frequently exhibit two types of biases, which are called the gambler’s fallacy (GF) and the hot hand fallacy (HHF). The gambler’s fal... Read More about Do psychological fallacies influence trading in financial markets? Evidence from the foreign exchange market.

Entrepreneurial migration in an integrated world (2017)
Journal Article
Bougheas, S., & Falvey, R. (2018). Entrepreneurial migration in an integrated world. Scandinavian Journal of Economics, 120(4), 1171-1201. https://doi.org/10.1111/sjoe.12249

A growing number of developed countries are offering entrepreneurial visas as a means of attracting entrepreneurial talent and capital. In this paper we use a simple two sector model of international trade with heterogeneous agents and financial fric... Read More about Entrepreneurial migration in an integrated world.

Product and labor market entry costs, underemployment and international trade (2017)
Book Chapter
Bougheas, S., & Riezman, R. (2017). Product and labor market entry costs, underemployment and international trade. In B. J. Christensen, & C. Kowalczyk (Eds.), Globalization: strategies and effects (19-45). Springer. https://doi.org/10.1007/978-3-662-49502-5_2

We develop a small, open economy, two-sector model with heterogeneous agents and endogenous participation in a labor matching market. There are two types of agents: workers and entrepreneurs. Both populations are heterogeneous. Workers are distinguis... Read More about Product and labor market entry costs, underemployment and international trade.

Bank insolvencies, priority claims and systemic risk (2016)
Journal Article
Bougheas, S., & Kirman, A. (2016). Bank insolvencies, priority claims and systemic risk. Lecture Notes in Economics and Mathematical Systems, 683, 195-208. https://doi.org/10.1007/978-3-319-40803-3_8

We review an extensive literature debating the merits of alternative priority structures for banking liabilities put forward by financial economists, legal scholars and policymakers. Up to now, this work has focused exclusively on the relative advant... Read More about Bank insolvencies, priority claims and systemic risk.

Lead-lag relationships in an embryonic stock market: exploring the role of institutional ownership and liquidity (2016)
Journal Article
Arjoon, V., Bougheas, S., & Milner, C. (2016). Lead-lag relationships in an embryonic stock market: exploring the role of institutional ownership and liquidity. Research in International Business and Finance, 38, https://doi.org/10.1016/j.ribaf.2016.04.012

This paper investigates the influence of institutional ownership and liquidity on stock return relationships for an embryonic and relatively illiquid stock market. Using daily, individual stock data for Trinidad and Tobago from 2001 to 2015 and a VAR... Read More about Lead-lag relationships in an embryonic stock market: exploring the role of institutional ownership and liquidity.

Risk taking and information aggregation in groups (2015)
Journal Article
Bougheas, S., Nieboer, J., & Sefton, M. (2015). Risk taking and information aggregation in groups. Journal of Economic Psychology, 51, https://doi.org/10.1016/j.joep.2015.08.001

We report a controlled laboratory experiment examining risk-taking and information aggregation in groups facing a common risk. The experiment allows us to examine how subjects respond to new information, in the form of both privately observed signals... Read More about Risk taking and information aggregation in groups.

The open economy balance sheet channel and the exporting decisions of firms: evidence from the Brazilian crisis of 1999 (2015)
Journal Article
Bougheas, S., Mizen, P., & Silva, S. (2015). The open economy balance sheet channel and the exporting decisions of firms: evidence from the Brazilian crisis of 1999. Oxford Economic Papers, 67(4), 1096-1122. https://doi.org/10.1093/oep/gpv046

We consider the impact of the Brazilian crisis of 1999 on the extensive and intensive margin of exporters versus non-exporters through the open economy balance sheet channel. Using an open economy balance sheet channel model with firm heterogeneity,... Read More about The open economy balance sheet channel and the exporting decisions of firms: evidence from the Brazilian crisis of 1999.

Complex financial networks and systemic risk: a review (2015)
Book Chapter
Bougheas, S., & Kirman, A. (2015). Complex financial networks and systemic risk: a review. In P. Commendatore, S. Kayam, & I. Kubin (Eds.), Complexity and Geographical Economics: Topics and Tools. Springer International Publishing. https://doi.org/10.1007/978-3-319-12805-4_6

In this paper we review recent advances in financial economics in relation to the measurement of systemic risk. We start by reviewing studies that apply traditional measures of risk to financial institutions. However, the main focus of the review is... Read More about Complex financial networks and systemic risk: a review.

Pooling, tranching, and credit expansion (2013)
Journal Article
Bougheas, S. (2014). Pooling, tranching, and credit expansion. Oxford Economic Papers, 66(2), https://doi.org/10.1093/oep/gpt029

Traditionally banks have used securitization for expanding credit and thus their profitability. It has been well documented that, at least before the 2008 crisis, many banks were keeping a high proportion of the securities that they created on their... Read More about Pooling, tranching, and credit expansion.