Paserman at Israel Behavioral Finance Conference
Dr. Michal Paserman, finance research faculty, presented her research at the Second Israel Behavioral Finance Conference.
The conference brought together leading researchers and provided a platform to discuss and explore advanced research topics and issues in behavioral finance theory and its applications to: the theory of the firm, individual and professional investors, financial markets, international finance, financial institutions and more.
Dr. Paserman presented her work on “Comovement or Safe Haven? The Effect of Corruption on the Market Risk of Sovereign Bonds of Emerging Economies during Financial Crises”. Paserman’s work shows that the sensitivity of sovereign bonds issued by countries perceived as more corrupt to systematic shocks, increases during financial crises. The prices of bonds issued by less corrupt countries are determined more idiosyncratically when investor sentiment deteriorates, and realize more hedging benefits against the S&P 500 risk.
Paserman’s findings have important implications for global financial stability and suggest that by reducing corruption, emerging markets could benefit from global integration while decreasing potential side effects of sudden capital outflows during crises.