This study investigates how banks design financial products to cater to yield-seeking investors. We focus on a large market of investment products targeted exclusively at households: retail structured products. These products typically offer a high return under their best-case scenario—the headline rate—that is nested in a complex payoff formula. Using a text analysis of the payoff formulas of the 55,000 products issued in Europe from 2002 to 2010, we measure product headline rates, complexity, and risk. Over this period, product headline rates depart from the prevailing interest rates as the latter decrease, complexity increases, and risky products become more common. In the cross section, the headline rate of a product is positively correlated with its level of complexity and risk. Higher headline rate, more complex, and riskier products appear more profitable to the banks distributing them. Our results suggest that financial complexity is a by-product of banks catering to yield-seeking investors.
The present study was carried out on 30 cadavers (5 fresh, 20 preserved adult and 5 fresh stillborn) following injection of red latex through the subclavian and common iliac arteries. The blood supply to the peripheral nerves was studied in general, together with the vascular pedicles to the ulnar, saphenous, sural, deep and superficial peroneal nerves, and the superficial branch of the radial nerve. The nutrient arteries supplying the peripheral nerves came from either the adjacent axial artery or the fasciocutaneous or muscular arteries. They formed anastomotic channels in the epineurium and penetrated it to form a continuous longitudinal artery. Based on the presence of absence of dominant arterial pedicles, five patterns of blood-supply to the nerves could be identified. I: no dominant arterial pedicle; II: only one dominant artery (e.g. artery with a diameter more than 0.8 mm and accompanying the nerve for most of its length); III: only one dominant vessel that divided into ascending and descending branches to supply the nerve; IV: multiple dominant pedicles; V: multiple dominant arterial pedicles forming a continuous artery that accompanied the nerve. The arterial pedicles to the ulnar, saphenous and deep peroneal nerves and the superficial branch of the radial n. had mean diameters of over 0.8 mm, thus being suitable for microvascular anastomosis. Those to the sural nerve were not present in two thirds of the dissected cadavers. In 10% of the cadavers the superficial peroneal nerve had an arterial pedicle that accompanied the nerve for less than two cm with a mean diameter less than 0.8 mm. The ulnar nerve could be very suitable as a donor vascularized nerve graft as it had a dominant vascular pedicle in all the cases studied; however, its use should be restricted to C8 and T1 root damage of the brachial plexus. The superficial branch of the radial n. might be suitable for vascularized nerve grafting, but this is difficult in practice since the radial artery is a major limb artery. The saphenous nerve had a dominant arterial pedicles in all the cadavers dissected and could be the most suitable as a donor vascularized nerve graft, unlike the sural nerve which did not have a dominant arterial pedicle in two-thirds of the specimens. The deep and superficial peroneal nerves may also be unsuitable since the former is accompanied by a major limb vessel while the latter had a dominant vascular pedicle that accompanied the nerve for only a short distance in 10% of the dissected cadavers.
To study the role of talent in finance workers’ pay, we exploit a special feature of the French higher education system. Wage returns to talent have been significantly higher and have risen faster since the 1980s in finance than in other sectors. Both wage returns to project size and the elasticity of project size to talent are also higher in this industry. Last, the share of performance pay varies more for talent in finance. These findings are supportive of finance wages reflecting the competitive assignment of talent in an industry that exhibits a high complementarity between talent and scale. Received October 11, 2017; editorial decision September 4, 2018 by Editor Stijn Van Nieuwerburgh. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.
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