Yener Altunbaş, Mahir Binici, Leonardo Gambacorta, Andres Murcia, 05 December 2017

The main objective of macroprudential tools is to reduce systemic risks – in particular, the frequency and depth of financial crises. Most studies look at the impact of macroprudential measures on credit growth, focusing on country-wide data or bank-level information. This column presents new evidence using credit registry data at the bank-firm level to evaluate the impact on bank risk measures. Results show that macroprudential tools help stabilise credit cycles and contain bank risk.

David Marques-Ibanez, Michiel van Leuvensteijn, 03 February 2017

An unprecedented process of deregulation took place in the banking sector in the three decades prior to the Global Crisis. This column argues that during periods of intense bank competition, financial innovation can compound the adverse effects of competition on stability. Coupled with strong competition, the significant use of one such innovation – securitisation – in the run-up to the crisis was related to high levels of bank risk.

Martin Götz, Luc Laeven, Ross Levine, 01 June 2016

Economists differ on whether the geographic expansion of a bank’s activities reduces risk. A key challenge when attempting to answer this question is identification – does diversification cause lower risk, or are safer banks just also more diversified? This column uses a new identification strategy to demonstrate that geographic diversification materially reduces bank holding company risk. 

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