Vincent Bouvatier, Gunther Capelle-Blancard, Anne-Laure Delatte, 11 September 2018

Tax havens are estimated to concentrate 8% of global private financial wealth, reducing annual global tax revenues by about $200 billion. This column uses new country-by-country regulatory data on the foreign commercial presence of EU banks and compares it against gravity model predictions to examine the contribution of EU banks to tax evasion. It finds that bank activity in tax havens is three times larger than what is predicted by the gravity model, and that British and German banks are particularly present in tax havens. 

Signe Krogstrup, Cédric Tille, 29 August 2018

Volatility in international capital flows can disrupt international trade and finance. This column explores the role of agents’ exposure to risk in this dynamic, focusing on domestic financial firms. It finds that the impact of an increase in risk aversion on foreign currency funding is conditional on the bank’s initial net currency exposure. This suggests that the empirical link from global factors to cross-border bank funding depends on country-specific characteristics of financial institutions.

Giorgio Barba Navaretti, Giacomo Calzolari, Alberto Pozzolo, 01 March 2018

Financial technology companies have spurred innovation in financial services while fostering competition amongst incumbent players. This column argues that although incumbents face rising competitive pressure, they are unlikely to be fully replaced by FinTechs in many of their key functions. Traditional banks will adapt to technological innovations, and the scope for regulatory arbitrage will decline.

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The 7th MoFiR Workshop on Banking will be held in Ancona, Italy, at the Università Politecnica delle Marche on June 14-15, 2018.

The organizing committee of this small informal workshop invites submissions of high-quality theoretical and empirical research on financial intermediation. Scholars in the fields of banking and finance will meet to discuss current issues in banking, financial stability, and financial regulation, focusing on policy reforms for a stable global financial environment. The workshop will provide an opportunity for presentations and discussions about policy-relevant research in an informal and highly interactive environment.

The keynote speaker will be George G. Pennacchi (University of Illinois).

Travel and accommodation costs for presenters and invited discussants will be reimbursed for an amount up to EUR 500 for European travelers and EUR 1,200 for overseas travelers.

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.

John Vickers, 18 October 2017

How safe should banks be? In this video, John Vickers points out that regulators and academics have diverging points of view regarding banks' capital requirements. This video was recorded at the "10 years after the crisis" conference held in London, on 22 September 2017.

Richard Baldwin, Thomas Huertas, Tessa Ogden, 13 October 2017

The Global Crisis started ten years ago and proved a turning point in global economic policy. CEPR organised a high-level conference to discuss whether the regulatory reaction has been sufficient and where the next crisis might come from. This column summarises the conference discussions and introduces a set of video interviews with leading economists at the conference, including Paul Krugman, Anat Admati, John Vickers, Paul Tucker, among others.

Louis Nguyen, Jens Hagendorff, Arman Eshraghi, 02 October 2017

We know that managerial traits help explain firm performance, but we don't know whether the cultural heritage of those managers has a role in shaping performance through their behaviour. This column uses a novel dataset of bank CEO ancestry to argue that descendants of recent immigrants outperform their peers when competition is high. Banks led by CEOs whose cultural heritage emphasises restraint, group-mindedness, and long-term orientation are safer, more cost efficient, and are associated with more cautious acquisitions.

Ross Levine, Chen Lin, Zigan Wang, 26 June 2017

While the causes and consequences of mergers have received a lot of scholarly attention, geographic factors have thus far been neglected. Using US data, this column argues that greater geographic overlap of the subsidiaries and branches of two bank holding companies increases the likelihood of the two merging, and also boosts the cumulative abnormal returns of the acquirer, target, and merged companies. It also discusses how network overlap can affect synergies and value creation.

Mary Amiti, David Weinstein, 12 February 2017

We are living in a world in which banks are large relative to the economies they serve. This column uses comprehensive data on Japanese banks from 1990 to 2010 to examine how the fates of individual banks matter for aggregate performance. Much of the fluctuation in Japanese aggregate investment appears to be driven by the idiosyncratic successes and failures of a limited number of institutions, and there is good reason to believe that the situation is similar in many developed countries.

Peter Cziraki, Christian Laux, Gyöngyi Lóránth, 26 October 2016

Banks' payout decisions at the beginning of the financial crisis of 2007-2009 were particularly controversial as the crisis eroded the capital of many banks. Concerns were raised that banks may have engaged in wealth transfer to shareholders, or that they may have been reluctant to reduce dividends to avoid negative signalling. This column examines these arguments using a large dataset on US bank holding companies. Cross-sectional tests do not provide clear-cut evidence of active wealth transfer. Similarly, the evidence on signalling is mixed.

Ross Levine, Chen Lin, Wensi Xie, 07 October 2016

Many policies have been put in place to constrain the expansion of banks across economic borders, in part to avoid them becoming too big and interconnected to fail. However, some argue that such expansion can reduce risk. This column evaluates the impact of geographic expansion on the cost of a bank’s interest-bearing liabilities. Geographic diversification materially lowers bank holding companies’ funding costs, suggesting there is a real cost of restricting banks from using geographic expansion to diversify their risks.

Priyank Gandhi, Hanno Lustig, Alberto Plazzi, 21 August 2016

Governments and regulators are commonly assumed to offer special protection to the stakeholders of large financial institutions during financial crises. This column measures the ex ante cost of implicit shareholder guarantees to financial institutions in crises, and suggests that such protection affects small and large financial institutions differently. The evidence suggests that in the event of a financial crisis, stock investors price in the implicit government guarantees extended to large financial institutions, but not to small ones. 

Stefano Micossi, 20 August 2016

Some economists are approaching a consensus that the Eurozone’s financial architecture is now resilient enough to withstand another shock similar to that of 2010-11. This column argues that such a view may be overly optimistic. Economic and financial instability persists in member states and the banking sector, and institutions to tackle a shock remain incomplete. While the Eurozone remains vulnerable to a bad shock, the blanket application of burden sharing without consideration of current economic and financial conditions is unwise.

Tobias Adrian, Nellie Liang, 14 August 2016

Recent research into how monetary policy frameworks incorporate risks to financial stability has shown that policy affects both financial conditions and financial vulnerabilities that amplify negative shocks. This column argues that looser monetary policy improves financial conditions, but can in some situations worsen vulnerabilities through incentives for financial sector risk-taking and non-financial sector borrowing. Policymakers face an intertemporal trade-off between financial conditions and vulnerabilities which may impact a cost-benefit analysis of monetary policy.

Fabio Schiantarelli, Massimiliano Stacchini, Philip E. Strahan, 13 August 2016

The recession has left a legacy of non-performing loans on Italian banks’ balance sheets.  Policymakers in Italy understand well the importance of correcting their banks’ problems to foster a healthy economic recovery.  This column argues that reforming the judicial and extra judicial processes for recovering collateral offers the potential of improving banks’ balance sheets and enhancing financial stability, not only by increasing loan collections directly, but also by improving borrowers’ incentive to service their existing debt.

Federico Cingano, Francesco Manaresi, Enrico Sette, 24 June 2016

Negative shocks to bank balance sheets are problematic not just for financial markets, but for employment and economic growth more widely. This column uses evidence on a bank liquidity shock in Italy in 2007-10 to show the impact on firms’ production, investment, and employment. Firms borrowing from banks with a high exposure to the shock experienced a more intense fall both in credit flows and in investment expenditure. While the credit cut has been homogeneous across borrowers, firms with easier access to external finance were able to contain the negative consequences of the drop in credit for investment.

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Banking is one of the most complex areas of modern economies. Flawed understanding, mismanagement, and bad regulation of banks have caused the Great Financial Crisis of 2007-2010 and the worst economic crisis in Europe in decades. This course will shed some light on the theory of banking and recent empirical insights into the functioning of banks. Starting from a thorough discussion of basic conceptual frameworks it will discuss elements of shadow banking, financial stability, and bank regulation.

The course provides an introduction to the conceptual foundations of banking and explores the workings of banks in modern economies, by looking at problems of credit intermediation, liquidity provision, maturity transformation, relationship lending, and bank competition.

Thomas Eisenbach, David Lucca, Robert Townsend, 17 June 2016

The two main elements of bank industry oversight are regulation and supervision. This column provides a framework for thinking about supervision in relation to regulation. Using US data on supervisory hours spent, it finds evidence of economies of scale for bank size. Additionally, less risky banks receive substantially lower amounts of supervisory hours. The findings highlight that supervisors face resource constraints and trade-offs.

Efraim Benmelech, Ralf R Meisenzahl, Rodney Ramcharan, 11 June 2016

The US government’s ‘bailout of bankers’ in 2008-09 remains a highly controversial moment in economic policy. Many critics suggest that intervention to relieve household debt may have been more effective in stimulating economic recovery. This column suggests that without federal intervention to stabilise financial markets and recapitalise some non-bank lenders, the magnitude of the economic collapse might have been much worse. While household debt was incredibly important in reducing demand, the financial sector dislocations and the lack of credit also played a critical role.

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