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This Bite of Finance newsletter highlights recent ground-breaking research by Wharton’s finance faculty and papers supported by Finance at Wharton. In this July 2024 issue: intermediary elasticity; the impact of perceived environmental health risk on property values and neighborhood composition; how households are exposed to interest rate risk; factors that determine fund managers’ compensation; and improving anti-money laundering measures.
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Measuring Intermediaries’ Risk-Bearing Capacity
Paper: Intermediary Elasticity
Authors:
Amy Wang Huber, The Wharton School
Yu An, Johns Hopkins Carey Business School
Supported by the Jacobs Levy Center
More from the author:
“We measure how FX trading affects exchange rates because trading alters the risks that financial intermediaries have to bear, and we find that many other assets are affected by these FX-trading-induced risks.”
– Professor Amy Wang Huber
![A graph with blue and red rectangles. "Figure 4: Cross-Asset return variation explained by traded FX factors."](https://finance-pillar.wharton.upenn.edu/wp-content/uploads/2024/07/BiteOfFinanceGraphics2-9900000000079e3c.jpg)
How Households are Exposed to Interest Rate Risk
Paper: Interest-rate risk and household portfolios
Authors:
Sylvain Catherine, The Wharton School
James D. Paron, The Wharton School
Max Miller, Harvard Business School
Natasha Sarin, Yale Law School
Supported by the Jacobs Levy Center
![BiteOfFinanceGraphics SC 9900000000079e3c Graph supporting the paper, "Interest-rate risk and household portfolios"](https://finance-pillar.wharton.upenn.edu/wp-content/uploads/2024/07/BiteOfFinanceGraphics_SC-9900000000079e3c.jpg)
What Determines Fund Managers’ Compensation
Paper: Fund Flows and Income Risk of Fund Managers
Authors:
Winston Wei Dou, The Wharton School; National Bureau of Economic Research (NBER)
Xiao Cen, Mays Business School, Texas A&M University
Leonid Kogan, MIT loan School of Management; National Bureau of Economic Research (NBER)
Wei Wu, Mays Business School, Texas A&M University
Supported by the Jacobs Levy Center
More from the author:
“Managers’ compensation is primarily tied to their funds’ AUM, with strong investment returns increasing pay mainly by boosting AUM and also contributing to bonuses.”
– Professor Winston Wei Dou
![BiteOfFinanceGraphics Dou2 9900000000079e3c Table supporting the paper, "What Determines Fund Managers’ Compensation."](https://finance-pillar.wharton.upenn.edu/wp-content/uploads/2024/07/BiteOfFinanceGraphics_Dou2-9900000000079e3c.jpg)
The Impact of Perceived Environmental Health Risk on Property Values and Neighborhood Composition
Paper: Environmental health risks, property values and neighborhood composition
Authors:
Jules H. van Binsbergen, The Wharton School
Joao F. Cocco, London Business School; Centre for Economic Policy Research (CEPR)
Marco Grotteria, London Business School; Centre for Economic Policy Research (CEPR)
S Lakshmi Naaraayanan, London Business School
![BiteOfFinanceGraphics JVB 9900000000079e3c Heatmap of RSEI Cancer score by grid cells for Arch Wood Protection Inc, Conley, GA.](https://finance-pillar.wharton.upenn.edu/wp-content/uploads/2024/07/BiteOfFinanceGraphics_JVB-9900000000079e3c.jpg)
Anti-Money Laundering Improvements
Paper: Anti-Money Laundering: Opportunities for Improvement
Authors:
Kathryn Judge, Columbia University Law School
Anil K Kashyap, University of Chicago Booth School of Business
Supported by the Wharton Initiative on Financial Policy and Regulation (WIFPR)
More from WIFPR:
“In ‘Anti-Money Laundering: Opportunities for Improvement,’ Kathryn Judge and Anil K. Kashyap discuss the history of the U.S. anti-money laundering regime, its effectiveness, and principles for improving it.”
![BiteOfFinanceGraphics WIFPR 9900000000079e3c Table supporting the WIFPR White Paper, "Anti-Money Laundering: Opportunities for Improvement"](https://finance-pillar.wharton.upenn.edu/wp-content/uploads/2024/07/BiteOfFinanceGraphics_WIFPR-9900000000079e3c.jpg)
View more posts on the Discoveries blog.
View recent research on the Jacobs Levy Center’s SSRN page or on WIFPR White Papers.