A first approach to earthquake damage estimation in Haiti: advices to minimize the seismic risk

This study is in the frame of the cooperative line that several Spanish Universities and other foreign partners started with the Haitian government in 2010. According to our studies (Benito et al. in An evaluation of seismic hazard in La Hispaniola, after the 2010 Haiti earthquake, 33rd General Assembly of the European Seismological Commission, Moscow, Russia, 2012) and recent scientific literature, the earthquake hazard in Haiti remains high (Calais et al. in Nat Geosci 3:794–799, 2010). In view of this, we wonder whether the country is currently ready to face another earthquake. In this sense, we estimated several damage scenarios in Port-au-Prince and Cap-Haitien associated to realistic possible major earthquakes. Our findings show that almost 50 % of the building stock of both cities would result uninhabitable due to structural damage. Around 80 % of the buildings in both cities have reinforced concrete structure with concrete block infill; however, the presence of masonry buildings becomes significant (between 25 and 45 % of the reinforced concrete buildings) in rural areas and informal settlements on the outskirts, where the estimated damage is higher. The influence of the soil effect on the damage spatial distribution is evident in both cities. We have found that the percentage of uninhabitable buildings in soft soil areas may be double the percentage obtained in nearby districts located in hard soil. These results reveal that a new seismic catastrophe of similar or even greater consequences than the 2010 Haiti earthquake might happen if the earthquake resilience is not improved in the country. Nowadays, the design of prevention actions and mitigation policies is the best instrument the society has to face seismic risk. In this sense, the results of this research might contribute to define measures oriented to earthquake risk reduction in Haiti, which should be a real priority for national and international institutions.

Granger causality and systemic risk

Building on the concept of Granger causality in risk in Hong et al. (2009), and focusing on an international sample of large-capitalization banks, we test for predictability in comovements in the left tails of returns of individual banks and the global system. The main results show that large individual shocks (defined as balance-sheet contractions exceeding the 1% VaR level) are a strong predictor of subsequent shocks in the global system. This evidence is particularly strong for US banks with large desks of proprietary trading. Similarly, we document strong evidence of financial vulnerabilities (exposures) to systemic shocks in US subprime creditors.

Life-cycle portfolio choice with liquid and illiquid financial assets

Traditionally, quantitative models that have studied households׳ portfolio choices have focused exclusively on the different risk properties of alternative financial assets. We introduce differences in liquidity across assets in the standard life-cycle model of portfolio choice. More precisely, in our model, stocks are subject to transaction costs, as considered in recent macroliterature. We show that when these costs are calibrated to match the observed infrequency of households׳ trading, the model is able to generate patterns of portfolio stock allocation over age and wealth that are constant or moderately increasing, thus more in line with the existing empirical evidence.

Is financial instability male-driven? Gender and cognitive skills in experimental asset markets

The hypothesis that price stability would reliably increase with the fraction of women operating in financial markets has been frequently suggested in policy discussions. To test this hypothesis we conducted 10 male-only, 10 female-only and 10 mixed-gender experimental asset markets, and compared the effects of gender composition, confidence, risk attitude and cognitive skills. Male and female markets have comparable volatility and deviations from fundamentals, whereas mixed-gender markets are substantially more stable. On the other hand, higher average cognitive skills of the group are associated with reduced market volatility. Individual-level analysis shows that subjects with higher cognitive skills trade at prices closer to fundamental values and earn significantly higher profits; similarly, mixed markets exhibit lower mispricing, particularly for traders with lower cognitive skills. Our results are demonstrated to hold in other experimental asset market studies, suggesting that a mixed-gender composition reduces mispricing across different types of asset markets.