Are banks too large?

Lev Ratnovski, Luc Laeven, Hui Tong 31 May 2014

a

A

Large banks have grown significantly in size and become more involved in market-based activities since the late 1990s. Figure 1 shows how the balance-sheet size of the world’s largest banks increased two- to four-fold in the ten years prior to the crisis. Figure 2 illustrates how banks shifted from traditional lending towards market-oriented activities.

a

A

Topics:  Financial markets

Tags:  regulation, economies of scale, bank regulation, banking, Too big to fail, systemic risk, BASEL III, bank resolution, bank capital

The determinants of banks’ liquidity buffers and the role of liquidity regulation

Clemens Bonner, Iman van Lelyveld, Robert Zymek 01 November 2013

a

A

Until recently, liquidity risk was not the main focus of banking regulators. However, the 2007–2009 crisis showed how rapidly market conditions can change, exposing severe liquidity risks for some institutions. Although capital buffers were effective in reducing liquidity stress to some extent, they were not always sufficient. In the light of this, efforts are underway internationally as well as in individual countries to establish or reform existing liquidity risk frameworks – most notably the proposals by the Basel Committee on Banking Supervision (BCBS 2013).

a

A

Topics:  Financial markets Microeconomic regulation

Tags:  transparency, liquidity, regulation, banking, Too big to fail, disclosure

A game changer: The EU banking recovery and resolution directive

Thomas Huertas, María J Nieto 19 September 2013

a

A

To end moral hazard and “too big to fail”, investors, not taxpayers, should bear the loss associated with bank failures. Recently, ECOFIN took a major step in this direction. It agreed a common position with respect to the Banking Recovery and Resolution Directive. If confirmed in the trialogue with the Commission and the European Parliament, the Directive will:

a

A

Topics:  Financial markets

Tags:  moral hazard, Too big to fail, banks

Is there a future for international banks?

Dirk Schoenmaker 25 August 2013

a

A

The international, centralised, business model of banks has come under pressure after the global financial crisis. Supervisors are leaving their traditional consolidated approach, under which a bank as a whole is assessed. Instead, they are moving towards a stand-alone approach, under which the national subsidiaries are supervised separately. McCauley et al (2012) document this move from the international to the multinational bank model.

a

A

Topics:  Global crisis International finance

Tags:  banking, Too big to fail, Eurozone crisis, international banks

Big banks and macroeconomic outcomes

Franziska Bremus, Claudia M. Buch, Katheryn Russ, Monika Schnitzer 10 July 2013

a

A

Does the mere presence of big banks affect macroeconomic outcomes? Given that large banks can indeed be important for macroeconomic outcomes and financial stability, a number of current policy initiatives are aimed at limiting the impact of bank size: levies to finance bank-restructuring funds are often progressive in bank size; under Basel III, capital surcharges are higher for systemically important banks; in the Eurozone, the Single Supervisory Mechanism under the ECB applies in particular to banks whose total assets exceed €30 billion or 20% of their home economy’s GDP.

a

A

Topics:  International finance

Tags:  banking, Too big to fail

Hair of the dog that bit us: New and improved capital requirements threaten to perpetuate megabank access to a taxpayer put

Edward J Kane 30 January 2013

a

A


This column is a lead commentary in the VoxEU Debate "Banking reform: Do we know what has to be done?"

a

A

Topics:  International finance

Tags:  financial regulation, global crisis, Too big to fail, banks, Finance, taxpayers

Have we solved 'too big to fail'?

Andrew G Haldane 17 January 2013

a

A

No.

That is not my pessimistic verdict; it is the market’s. Prior to the crisis, the 29 largest global banks benefitted from just over one notch of uplift from the ratings agencies due to expectations of state support. Today, those same global leviathans benefit from around three notches of implied support. Expectations of state support have risen threefold since the crisis began.

a

A

Topics:  Financial markets

Tags:  bank regulation, Too big to fail

Macroeconomic adjustment and the history of crises in open economies

Joshua Aizenman, Ilan Noy 21 November 2012

a

A

Looking at recent banking crises, Gourinchas and Obstfeld (2012) have identified domestic-credit booms and real currency appreciation as the most significant predictors of future banking crises in both advanced and emerging economies1. An optimistic conjecture is that countries that previously experienced banking crises will tend to be more cautious. Efficient and fast adjustment of the public and the financial sectors to financial risks may reduce the probability of future banking crises.

a

A

Topics:  Financial markets Institutions and economics

Tags:  regulation, Banking crisis, Too big to fail

Destabilising market forces and the structure of banks going forward

Arnoud Boot 25 October 2011

a

A

The financial services sector has gone through unprecedented turmoil in the last few years. We see fundamental forces that have affected the stability of financial institutions. In particular, information technology has led to an enormous proliferation of financial markets, but also opened up the banks’ balance sheets by enhancing the marketability of their assets. As a matter of fact, a fundamental feature of recent financial innovations – securitisation, for example – is that they are often aimed at augmenting marketability.

a

A

Topics:  Financial markets International finance

Tags:  complexity, Too big to fail, systemic risk, macroprudential regulation

Incentive pay and bailouts

Tim Besley, Maitreesh Ghatak 27 August 2011

a

A

While it seems that the worst of the financial crisis of 2008 is over, most of the structural issues that lay behind it remain unresolved. This includes distortions in incentive pay due to government protection of investors from downside risk.

a

A

Topics:  Global crisis Global governance International finance Politics and economics

Tags:  financial regulation, Too big to fail, Bailouts

Pages