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.

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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 VoxEU.org 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.

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 VoxEU.org eBook presents a collection of essays by leading European and American economists that discuss both immediate solutions to the on-going financial crisis and medium- to long-term regulatory reforms.

Neeltje van Horen, 25 October 2011

The global financial crisis has hurt banks in both advanced and emerging economies, but this column says the turmoil has favored the emerging-market entities in relative terms. It predicts a growing role for emerging-market banks in the global financial system, particularly in their own regions.

Luc Laeven, 25 October 2011

Recent financial regulatory reforms target banks’ risk-taking behaviours without considering their ownership and governance. This chapter argues that bank governance influences how regulations alter bank’s incentives. Banks with more powerful owners tend to take more risks, and greater capital requirements actually increase risk-taking in banks with powerful shareholders. Bank regulation should condition on bank governance.

Hans Gersbach, 12 October 2011

Current macroeconomic policymaking suffers from an inadequate range of instruments and the absence of a comprehensive assignment of responsibilities. This column introduces a new CEPR Policy Insight designed to remedy these shortcomings. It proposes a framework for monetary, macroprudential, and microprudential policies.

Olivier Jeanne, Patrick Bolton, 25 April 2011

The Eurozone crisis has thrown into relief the dangers of financial contagion. The authors of CEPR DP8358 analyze the causes and consequences of sovereign debt crises in zones with financial integration. They conclude that without fiscal integration, the supply of government debt in these areas reaches an inefficient equilibrium, with safer governments inefficiently issuing too little of their high-quality debt and riskier governments issuing too much.

Svetlana Andrianova, Panicos Demetriades, David Fielding, Badi H Baltagi, 25 March 2011

International donors provide large amounts of financial capital to Africa in the form of aid and grants, but there are also large financial flows in the opposite direction. Many African banks invest large sums abroad and lend relatively little to local businesses. This column explains that this is because many banks suffer from a shortage of information about the creditworthiness of some of their customers.

Avinash Persaud, 14 September 2010

The role of financial institutions in the global crisis has led to a consensus that financial regulation must change. This column argues that the banking lobby, far from depleted, has struck back with a vengeance. It has managed to postpone the much needed regulation for a time when the need for it will be forgotten.

Richard Grossman, 23 July 2010

Richard Grossman of Wesleyan University talks to Romesh Vaitilingam about his new book ‘Unsettled Account: The Evolution of Banking in the Industrialized World since 1800’. Among other things, they discuss the problems of striking a balance between a dynamic banking system and a stable banking system. The interview was recorded at a conference on ‘Lessons from the Great Depression for the Making of Economic Policy’ in London in April 2010.

Thorsten Beck, 14 May 2010

Thorsten Beck of Tilburg University talks to Viv Davies about his current research in the areas of finance, growth and development - and the policy lessons for developing countries. The interview was recorded at Tilburg University in April 2010.

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