Presenters: Mads Markvart Kjær, Aarhus University and Olga Balakina, Aarhus University

Mads Markvart Kjær:

Title: Currency Imbalances in Global Banks and the Dollar

Abstract: We show that the difference in bond returns between net debtors whose debt is denominated in dollars relative to local currency significantly predicts the dollar. The economic mechanism is simple: when foreign-denominated bonds of net debtors increase more than dollar-denominated bonds, global banks' currency asset-liability mismatch increases, implying that global banks require a risk premium. The documented predictability generates  significant value for investors and can be utilized for timing currency anomalies.

Olga Balakina:

Title: Peer Effects in Stock Trading: the Effect of Co-workers, Family, and Neighbors

Abstract: This paper studies the drivers of the peer effects of co-workers, family, and neighbors in stock trading using Danish registry data. I find that neighbors are the most influential peers, followed by co-workers and family. Examining mechanisms, I find that desire to mimic similar peers instigates peer effect from all groups, with the strongest effect for co-workers. However, the learning channel, the tendency to follow financially informed peers, is confirmed only for co-workers. Overall, I provide new insights into heterogeneous peer effects across social networks, key for understanding how the rapid increase in social investment tools will impact financial markets.

Organizers: Stefan Hirth and Anders Merrild Posselt