Thorsten Beck, 12 April 2018

Thorsten Beck, Consuelo Silva-Buston, Wolf Wagner, 13 March 2018

International cooperation on bank supervision is still rare. This column analyses data on supervisory cooperation among a global sample of countries between 1995 and 2013 to show that cooperation among bank supervisors is not always optimal. Country pairs with higher cross-border externalities and lower heterogeneity are more likely to cooperate, and in more intense ways, but for some country pairs the costs of cooperation outweigh the benefits.

Zsofia Doeme, Stefan Kerbl, 24 January 2018

Risk weights define each bank's minimum capital requirements, but many doubt the comparability of the risk weights that banks report. This column quantifies the variability of these weights across banks, and finds that the country where a bank is headquartered creates statistically significant and economically important differences. Model output floors, as recently agreed upon by the Basel Committee, would reduce this unintended risk weight heterogeneity.

Felipe Alexander Dunsch, David Evans, Ezinne Eze-Ajoku, Mario Macis, 17 November 2017

Yener Altunbaş, Simone Manganelli, David Marques-Ibanez, 14 November 2017

Prudential supervision of banks has increasingly relied on capital requirements. But bank capital played a relatively minor role in predicting bank solvency during the Global Crisis, except for scarcely capitalised banks. This column argues that while capital is a helpful tool to support bank financial stability, it is complex for supervisors to calibrate it precisely. Macroprudential authorities should be able to complement capital-based tools with additional, borrower-based prudential instruments.

Jakob de Haan, Wijnand Nuijts, Mirea Raaijmakers, 06 November 2015

The Global Crisis revealed serious deficiencies in the supervision of financial institutions. In particular, regulators neglected organisational culture at the institutional level. This column reviews efforts since 2011 by De Nederlandsche Bank to oversee executive behaviour and cultures at financial institutions. These measures aimed at identifying risky behaviour and decision-making processes at a sufficiently early stage for appropriate countermeasures to be implemented. The findings show that regulators can play a larger part in securing the stability of the financial system by taking an active role in shaping institutional cultural processes.

Sylvester Eijffinger, Rob Nijskens, 23 November 2012

The Eurozone is moving towards a banking union with the ECB at its centre. This column argues that there are problems with the European Commission’s proposal. The ECB can never supervise all 6000 banks in the Eurozone, supervision should be separated from monetary policy to avoid conflicts of interest, and joint deposit insurance and resolution funds must be created. Furthermore, the ECB should exert constructive ambiguity in its supervision.

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