Carlos Francisco Alves

This article examines the governance of Latin American central banks, focusing on trade‐offs arising from multiple mandates, governance design, and central bank board characteristics. The analysis combines a qualitative review of central bank statutes with an original panel dataset covering eight Latin American central banks over the period 2004–2023. Using fixed‐effects panel regressions, the study explores how governance arrangements and board composition are associated with inflation outcomes, the inflation target level, and the inflation target interval. The results indicate that governance design is primarily associated with differences in the structure of inflation‐targeting frameworks rather than with inflation levels. Higher levels of central bank independence are consistently associated with narrower inflation target intervals, which may reflect tighter control over short‐run inflation deviations. Board member characteristics display selective associations: political affiliation and board heterogeneity are linked to inflation outcomes in some specifications, while academic qualifications, gender composition, and professional background are more closely related to the calibration of inflation‐targeting instruments, particularly the inflation target interval. These associations are stronger for continuous measures of policy design than for binary indicators of inflation target achievement, which are more closely related to macroeconomic conditions and inflation persistence. Overall, the findings suggest that central bank governance in Latin America operates mainly through institutional design and policy calibration rather than through immediate adjustments in inflation outcomes.

Through the lens of institutional theory and the theory of economic regulation, we assess the readability of European banks’ annual reports by studying the introduction of the Single Supervisory Mechanism (SSM) as a quasi-natural experiment. Using AI resources, we developed a textual analysis. Then, we applied the Difference-in-Differences approach to compare banks supervised by the SSM — significant banks — with banks from European Union countries, only supervised by the National Supervisory Authorities (NSA) — non-significant banks. Over time, European banks have published more information in their annual reports. The SSM impacted the readability of significant banks’ reports, which became shorter and presented plainer English than those of non-significant banks. Surprisingly, the reports of significant banks, whose NSA is a Financial Supervisory Authority, present higher readability after the SSM introduction than those whose NSA is the National Central Bank. This study contributes to the literature on the SSM and textual disclosure in the banking sector.

We assess the impact of adopting a transnational supervisor on the distance-to-distress and credit risk of large and complex banks, exploring the establishment of the Single Supervisory Mechanism (SSM) in 2014 as a quasi-natural experiment. Using a differences-in-differences approach, we compare SSM banks vis-à-vis banks with a similar size and complexity operating in European countries outside the SSM. Our results suggest that adopting a transnational supervisor increases the distance-to-distress, particularly for banks operating in countries with larger banking sectors, higher market concentration and greater supervisory discretion. We also show that SSM banks reduced loan loss reserves and NPLs significantly more than non-SSM banks, but only among the most capitalized banks – which is consistent with the notion that well-capitalized banks are better able to weather haircuts induced by credit risk reduction initiatives. Interestingly, we find that SSM banks from countries with greater supervisory discretion saw their NPLs increase in the first years of the SSM, which could reflect the elimination of national idiosyncrasies in credit risk accounting. In general, the evidence presented in our paper suggests that transnational supervision bears a superior ability to increase the distance-to-distress, reduce credit risk, and harmonize supervisory practices among large and complex banks.

This study reports survivorship bias for the momentum effect. Effectively, this study shows that the Portuguesestock market does not exhibit the “momentum effect” when all listed stocks are considered spanning the periodfrom January 1991 to December 2016. However, this phenomenon was detected when only survivor stocks areused. This study also shows that average returns for momentum portfolios were similar before and after the 2007financial crisis

Purpose – This paper aims to investigate if the inclusion of Bitcoin among the assets available to retail investors in the Brazilian market has an impact on the efficient frontier and, therefore, on the optimal choices of investors. Design/methodology/approach – This study calculates the efficient frontier with and without the inclusion of Bitcoin and estimates optimal portfolios for different criteria and time intervals. The sample period runs from 07/01/2013 to 06/30/2018 and the daily closing values of the selected assets/indices were used. Findings – This study finds evidence that the inclusion of Bitcoin among the investment alternatives would cause a statistically significant positive displacement and an expansion of the efficient frontier of the Brazilian retail market. This would result in a significant increase in the return on the tangency portfolio. In addition to improving the indicators of optimization of the risk-return binomial, the cryptoasset would be included in many optimal portfolios in the 2013Q3-2018Q2 period. Originality/value – The results obtained show that, as reported for more developed markets, Bitcoin has caused an expansion of the efficient frontier of the Brazilian retail market. ResumoObjetivo – O objetivo deste estudo é investigar se a inclusão do Bitcoin entre os ativos elegíveis para investidores de varejo no mercado brasileiro teria impacto na fronteira eficiente e, por conseguinte, nas escolhas ótimas dos investidores. Metodologia – Foram calculadas as fronteiras eficientes com e sem a inclusão do Bitcoin e realizadas simulações para estimar as carteiras ótimas segundo diferentes critérios e intervalos temporais. O período da amostra vai de 01/07/2013 até 30/06/2018 e foram utilizados os valores diários de fechamento dos ativos/índices selecionados. Resultados – Este estudo encontra evidência de que a inclusão do Bitcoin entre as alternativas de investimento provocaria um deslocamento positivo, estatisticamente significativo, e uma expansão da fronteira eficiente no mercado brasileiro de varejo. Isso resultaria em um aumento expressivo do retorno da carteira de tangência. Além de melhorar os indicadores de otimização do binômio risco-retorno, o criptoativo seria incluído em carteiras ótimas em parte significativa do período 2013T3-2018T2. Contribuições – Os resultados obtidos evidenciam que, tal como reportado para mercados mais desenvolvidos, o Bitcoin provocou uma expansão da fronteira eficiente do mercado brasileiro de varejo. Palavras-chave – Bitcoin; moeda digital; seleção de portfólios; alocação de ativos; mercado de capitais brasileiro.