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

What are the determinants of banks’ liquidity holdings and how are these reshaped by liquidity regulation? Based on a sample of 7,000 banks in 30 OECD countries, this column argues that banks’ liquidity buffers are determined by a combination of both bank- and country-specific variables. The presence of liquidity regulation substitutes for most of these determinants while complementing the role of size and institutions’ disclosure requirements. The complementary nature of disclosure and liquidity requirements provides a strong rationale for considering them jointly in the design of regulation.

Edwin Truman, 10 September 2013

Should we expect more global financial crises? This column argues that we should. Global financial crises are far from being a thing of the past because they are often caused by buildups of excessive domestic and foreign debt. To successfully address them and to limit negative spillovers, we need coordinated actions that prevent a contraction in global liquidity. Unless we establish this more robust, coordinated global financial safety net centred on central banks (which is where the money is), we may end up being incapable of addressing inevitable future crises.

Dirk Schoenmaker, 25 August 2013

After the financial crisis, there was a shift from international to multinational banks due to supervisors’ increasingly national approach. This column provides an alternative solution that aims to keep international banking alive. What is key is that, first, national supervisors are internationally coordinated and, second, that the whole system is supported up by an appropriate fiscal backstop.

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

The regulation of big banks has been in the spotlight for many reasons. This column adds to the list. Examining evidence for more than 80 countries for the years 1995-2009, banking systems are shown to be highly concentrated. In many cases, the banks are so big that bank-specific credit-growth fluctuations affect the macroeconomy.

Klaus Düllmann, Natalia Tente, 27 June 2013

The macroprudential approach to banks’ capital requirements aims to internalise the systemic risk of big banks while encouraging banks to accumulate capital buffers during good times. This column presents a measure of systemic risk and risk contributions that could help economists better calculate countercyclical capital surcharges.

Manuel Illueca, Lars Norden, Gregory Udell, 26 June 2013

Economic liberalisation can go wrong when the objectives and corporate governance of the firms in the deregulated industry are not adequately taken into account. This column presents evidence on the deregulation of the Spanish savings banks, known as ‘cajas’, which led to a dramatic expansion of lending and branching, increase in risk taking, and the final implosion of the whole savings-bank sector in Spain in 2012.

Matthias Efing, Harald Hau, 18 June 2013

In response to the civil lawsuit filed by the US Department of Justice in February 2013, Standard & Poor's affirms that its ratings were "objective, independent and uninfluenced by conflicts of interest". This column presents empirical evidence opposing this claim. The data suggests a systematic rating bias in favour of the agencies' largest issuer clients.

Edda Zoli, 15 June 2013

What has driven Italian sovereign spreads movements? This column presents new research looking into increased volatility in sovereign debt since the summer of 2011. Shocks in investor risk appetite, news related to the Eurozone debt crisis, and consistently bad news in Italy, have been important drivers of Italian sovereign spreads. These findings mean that we need to reduce country-specific vulnerabilities as well as sorting out the Eurozone.

Lev Ratnovski, 02 June 2013

Bank competition policy seeks to balance efficiency with incentives to take risk. This calls for an intermediate degree of competition. This column argues that although the traditional policy tools are rules on entry/exit and the consolidation of banks, the Crisis showed that a focus on market structure alone is misplaced. There are other, newer ways in which competition policy can support financial stability: dealing with too-big-to fail and other structural issues in banking, as well as facilitating crisis management.

Viral Acharya, Sascha Steffen, 23 May 2013

A pernicious aspect of the Eurozone crisis is the ‘doom loop’ linking European banks and governments. This column argues that poor European policy choices in the wake of the 2008 Global Crisis worsened the problem. Rather than being forcefully recapitalised as in the US and UK, many Eurozone banks were left undercapitalised and free to gamble for redemption. In what may be the greatest carry trade ever, they borrowed cheap, first in short-term debt markets and then from the ECB, to invest in high-yield but risky sovereign debt. Substantial bank recapitalisations against sovereign-bond losses is the way forward.

Erik Feyen, Ines Gonzalez del Mazo, 12 May 2013

Before the global financial crisis, European banks had rapidly expanded their foreign-lending activities. However, this column argues that financial stress in Europe has put this process into reverse and negatively affected credit conditions in developed and emerging markets alike. As European banks repair their balance sheets and rethink their business models in a context of stricter regulatory requirements, financial fragmentation, and a deteriorating European economy, they continue to retrench to home markets.

Daniel Hardy, Heiko Hesse, 20 April 2013

The IMF has recently argued that Europe’s financial sector has done much to address the recent financial crisis. This column argues that vulnerabilities remain, and calls for intensified efforts. Europe-wide stress tests will play a crucial role: selective asset-quality reviews and a high degree of transparency would add credibility and reduce uncertainty. Europe-wide stress tests will need to focus on structural, cross-border, and funding-related issues.

David Miles, 17 January 2013

There is a view that banks are using more equity capital – and relatively less debt – to finance the assets they hold, creating substantial costs so great as to make more capital unfeasible. This column argues that these costs are exaggerated, but that the benefits of having banks that are far more robust are likely to be large. The argument that equity capital is costly is more an admittance that banks cannot convince people to provide finance in the knowledge that their returns will inevitably share in the downside and the upside. Worryingly, it is as if banks cannot play by the same rules as other enterprises in a capitalist economy. After all, capitalists are supposed to use capital.

Eugenio Cerutti, Stijn Claessens, Patrick McGuire, 17 December 2012

The current global crisis highlights how interconnected the financial world has become. This interconnectedness is a challenge for global systemic risks analysis. This column argues that much of the data needed for tracking systemic risk are not available and that, in fact, world decision makers are leading in the dark. Recent initiatives that aim to improve aggregate banking statistics and gather better institution-level data are welcome, but the complexity of the system means that we won’t have the data we need for some time yet.


The aim of the 2nd MoFiR Workshop on Banking is to bring together scholars in banking and finance to discuss the causes, transmission mechanisms, and consequences of the crisis, focusing also on the policy implications for the current situation and the potential reforms.

The organizing committee invites the submission of full papers or extended abstracts on the following themes:

• Financial sector fragility, contagion, safety nets, and crises;
• The (dis-)advantages of cross-border banking;
• Liquidity management and provision by financial intermediaries;
• Banks’ organizational models, informational asymmetries and distance;
• Bank lending, entrepreneurial finance and firm growth;
• Experiments in banking.

Hans Degryse, Martin Brown, Daniel Hoewer, María Fabiana Penas, 05 June 2012

Might bank consolidation and the increasing reliance on external credit ratings harm access to credit for start-up firms, especially those in high-tech industries? This column examines how the availability of credit for start-ups in Germany is related to their external credit rating as well as the size and expertise of their main bank.

Morris Goldstein, 27 May 2012

Europe’s banks are in bad shape. Slowing growth and rising capital adequacy ratios would stretch any bank. Doubts about sovereign debt and the Eurozone’s future may push some EU banks over the edge. Now the EU has decided how to implement the principles of the latest round of globally coordinated banking regulations – Basel III. This column argues that the EU has got it wrong.

Thorsten Beck, 28 October 2011

Thorsten Beck talks to Viv Davies about the recently published Vox eBook on ‘The Future of Banking’ – a collection of essays by leading European and US economists that provide solutions to the current financial crisis and proposals for medium- to long-term regulatory reforms. The authors call for a forceful resolution to the current crisis in the Eurozone, better incentives for banks to internalize risk and a more credible resolution regime. The interview was recorded on 27 October 2011. [Also read the transcript]

Thorsten Beck, 25 October 2011

For better or worse, banking is back in the headlines. From the desperate efforts of crisis-struck Eurozone governments to the Occupy Wall Street movement currently spreading across the globe, the future of banking is hotly debated. This column summarises a new eBook containing essays by leading economists that discuss both immediate solutions to the on-going financial crisis and medium- to long-term regulatory reforms.

Thorsten Beck, 25 October 2011

This new Vox eBook presents a collection of essays by leading European and US economists that offer solutions to the crisis and proposals for medium- to long-term reforms to the regulatory framework in which financial institutions operate.


CEPR Policy Research