Viral Acharya, 23 September 2011

Viral Acharya of New York University talks to Viv Davies about the recent report issued by the UK's Independent Commission on Banking. They discuss capital requirements and the proposal to ringfence bank’s retail versus investment activities. They also discuss the likely costs of the proposals and what the implications may be for competition in the banking sector. Acharya stresses in particular the importance of appropriate risk weights even with ringfencing, especially in context of the current Eurozone debt crisis. The interview was recorded on 16 September 2011. [Also read the transcript]

Donato Masciandaro, 16 September 2011

Credit-rating agencies have come in for strong criticism for their role in the global crisis. This column asks whether by communicating their opinions rating agencies can make a crisis worse and outlines some of the policy implications if they do.

Viral Acharya, Arvind Krishnamurthy, Enrico Perotti, 14 September 2011

Liquidity risk – which was at the heart of the September 2008 financial meltdown and explains regulatory concerns about a Greek default today – remains an open issue in financial regulatory reform. This column presents a consensus view of several leading academics on what more needs to be done to close this regulatory gap.

Roger Alford, 12 September 2011

Ever since public money was used to bail out banks, the public has been demanding change in the way they are run. This is particularly the case in the UK, where the Independent Banking Commission presents its final report today. If it calls for a breakup of Britain’s banks into deposit and investment banks, this column argues that to follow such advice would be a grave mistake.

Mark Mink, 31 August 2011

While central bank liquidity support is used on a large scale to combat the instability of the banking sector, this column argues that the prospect of receiving such support might well have been one of the causes of the instability. In particular, it shows that the provision of liquidity support stimulates banks to engage in various forms of risk-taking, and to do so in a procyclical way.

Charles Goodhart, 30 August 2011

The calls for better bank regulation are many. This column argues that regulators have the concepts right, but the mechanisms are in need of repair.

Tim Besley, Maitreesh Ghatak, 27 August 2011

As we approach three years since the fall of Lehman Brothers, the incentives that led the financial sector to take on too much risk still exist. This column argues that they will remain so long as governments continue to provide an implicit guarantee that banks will be bailed out. To tackle this, the authors dare to propose a tax on bonuses.

Enrico Perotti, Lev Ratnovski, Razvan Vlahu, 26 August 2011

As leading economists in Jackson Hole and Lindau call for more and better regulation to avoid a repeat global crisis, this column argues that higher bank capital, while essential, will be no panacea. In particular, it shows that tail risk often goes unaddressed. Regulators should therefore adopt direct tools for dealing with tail risk, including limits on asset and liability-side risk exposures.

Deniz Igan, Prachi Mishra, 11 August 2011

Did anti-regulation lobbying fuel the subprime crisis? This column shows that there is a strong relationship between financial industry lobbying and favourable financial regulation legislation. It argues that the financial industry fought, and defeated, measures that might have curbed some of the reckless lending practices that many think played a pivotal role in igniting the crisis.

Thorsten Beck, Olivier De Jonghe, Glenn Schepens, 25 July 2011

Bank stability and economic stability are intimately linked – as the last few years can attest. This column finds that the market, regulatory, and institutional framework in which banks operate has a significant impact on the relationship between bank competition and fragility, with widespread implications for the broader economy.

Sergi Lanau, 19 July 2011

The global crisis has forced a root-and-branch rethink of financial regulation. This column discusses the international dimensions. It presents new evidence to suggest that non-banks tend to borrow more abroad when domestic regulation is tight.

Sascha Steffen, 13 July 2011

Last year’s European bank stress tests were faulty to say the least. For example, those tests failed to find problems with any of the Irish Banks that soon afterwards dragged Ireland into its current crisis. While the soon-to-be-released stress tests may do better, the previous shortcomings suggest that a broader, more transparent evaluation is needed. This column proposes a new way of assessing systemic risk using publicly available stock price data and financial statement information.

Viral Acharya, Thomas Cooley, Matthew Richardson , Ingo Walter, 12 July 2011

22 July marks the first anniversary of the signing of the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act, the most comprehensive US regulatory effort for financial markets since the 1930s. This column introduces an eBook analysing where the regulatory process stands after one year and where it is headed.

Viral Acharya, Thomas Cooley, Matthew Richardson , Ingo Walter, 12 July 2011

22 July marks the first anniversary of Dodd-Frank, the most comprehensive US regulatory effort for financial markets since the 1930s. In June, The Pew Charitable Trusts and NYU's Stern School collected an array of prominent experts to provide an interim report of the bill's effectiveness. Vox's latest ebook presents their conclusions.

Harry Huizinga, Wolf Wagner, Johannes Voget, 11 July 2011

What new policies should be included in financial and regulatory reforms? This column argues that banks are under-taxed along many dimensions and analyses a proposed broad tax on financial-sector income.

Franklin Allen, Thorsten Beck, Elena Carletti, Philip Lane, Dirk Schoenmaker, Wolf Wagner, 20 June 2011

The global crisis has provided compelling evidence of the need to understand the role of banks in international finance. This column introduces a new CEPR report analysing key aspects of cross-border banking taking a European focus. The report argues that policy reforms in micro- and macro-prudential regulation and macroeconomic policies are urgently needed for Europe to improve its efficiency and reduce its risk.

Jon Danielsson, Robert Macrae, 17 June 2011

Financial risk models have been widely criticised for both theoretical and practical failures, especially during the recent financial crisis. In the second of two columns, the authors outline why the shortcomings of risk models matter before making suggestions for how the financial industry and supervisors should use models in practice.

Jon Danielsson, Robert Macrae, 16 June 2011

Risk models are at the heart of the financial sector’s self-monitoring as well as supervision by regulators. This column, the first of two, addresses the question of how risk models are misused in practice by practitioners and supervisors alike. This misuse causes risk management to fail when it is most needed.

Avinash Persaud, 04 June 2011

Competition in the banking sector is seen by many as a way to reduce the chances of instability and a repeat crisis. This column highlights one area – the market for securities exchange, clearing, and settlement – where such competition is at risk of being undermined.

Andrew Rose, Tomasz Wieladek, 29 May 2011

During the global crisis governments made substantial interventions in financial markets, particularly in the banking sector. This column argues that one unintended consequence of bank nationalisations has been to reduce cross-border lending. After nationalisation, foreign banks reduced British lending as a share of total lending by about 11 percentage points and increased interest rates to UK residents by 70 basis points. This suggests foreign nationalised banks have engaged in financial protectionism.

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