Anat Admati, 06 December 2019

Anat Admati discusses what’s needed to get financial regulation that works.

Tara Rice, Kathryn Petralia, 24 September 2019

On 24 September the CEPR launched the latest Geneva Report on the world economy, called Banking disrupted? Financial intermediation in an era of transformational technology. Tim Phillips asks Tara Rice and Kathryn Petralia, two of the authors, whether fintechs and cryptocurrencies signal the beginning of the end for banks.

Kathryn Petralia, Thomas Philippon, Tara Rice, Nicolas Véron, 24 September 2019

FinTech and Big Tech firms are both increasingly stepping on banks’ traditional turf. This column introduces the 22nd Geneva Report on the World Economy, which looks at the challenges generated by new technology-enabled entrants to the global banking industry and the public authorities that oversee it. It argues that to respond adequately to the FinTech/Big Tech challenge, authorities will need to raise their game and enter uncharted territories.

Thorsten Beck, Consuelo Silva-Buston, Wolf Wagner, 04 September 2019

Following the Global Crisis, countries have significantly increased their efforts to cooperate on bank supervision, the prime example being the euro area’s Single Supervisory Mechanism. However, little is known about whether such cooperation helps improve the stability of the financial system. Using panel data for a large sample of cross-border banks, this column examines whether a higher incidence of supervisory cooperation is associated with higher bank stability. It finds that supervisory cooperation is effective, working through asset risk, but not for very large banks, which are the ones that pose the highest risk to financial stability.

Matthew Jaremski, David Wheelock, 15 August 2019

In response to the Global Crisis a decade ago, banks have tried to make themselves more resilient to shocks transmitted through interbank connections. But the opacity of interbank networks makes it difficult to measure the effectiveness of such policies. This column uses evidence from 20th century America to show how the founding of the Federal Reserve and the Great Depression affected interbank networks and lending practices. The creation of the Fed reduced network concentration and therefore contagion risk, but the system remained vulnerable to local panics.

Janine Aron, John Muellbauer, 07 May 2019

Mobile money has transformed the landscape of financial inclusion in developing and emerging market countries, leapfrogging the provision of formal banking services. This column explains how mobile money potentially helps ameliorate several areas of market failure in developing economies, including saving, insurance, and the empowerment of women. It illustrates these effects using examples from a burgeoning empirical literature and concludes that the system-wide effects of mobile money may be even greater than current studies suggest.

Sanjiv Das, Kris Mitchener, Angela Vossmeyer, 11 March 2019

The Global Crisis brought attention to how connections among financial institutions may make systems more prone to crises. Turning to a major financial crisis from the past, this column uses data from the Great Depression to study risk in the commercial banking network leading up to the crisis and how the network structure influenced the outcomes. It demonstrates that when the distribution of risk is more concentrated at the top of the system, as it was in 1929, fragility and the propensity for risk to spread increases.

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Submissions are sought on the following themes:
• Digital currencies, fintech, and technology
• Regulation, markets, and financial intermediation
• International economics
• Macroeconomics, monetary policy, macrofinance, monetary policy frameworks, and communication
• Inflation dynamics
• Policy lessons from the history of finance and central banking
The deadline for submissions is Saturday, February 2nd.
The meeting commences on Thursday, July 18 at the FRB New York, featuring presentations by Nellie Liang and Jeremy C. Stein, and John C. Williams.
The 31 contributed sessions take place on Friday and Saturday, July 19-20 at the Kellogg Center, SIPA, Columbia University. Contributed sessions are organized by BIS, FSB, IMF, SNB, FRB St. Louis, Bank of Israel, FRB Cleveland, ECB, Riksbank, FRB San Francisco, Norges Bank, Bank of Spain, Bank of Japan, Bank of Canada, Bank of Korea, OeNB, FRB Minneapolis, Bundesbank, Central Bank of Ireland, SAFE, CEPR, ABFER, and IBRN.

João Granja, Christian Leuz, Raghuram Rajan, 04 December 2018

Risk taking was pervasive during the Global Crisis even in the most unlikely areas, such as stretching to lend at a distance. Using US data, this column examines the degree to which competition amongst lenders interacts with the cyclicality in lending standards using a simple and policy-relevant measure, the average physical distance of borrowers from banks’ branches. It finds that distances widen considerably when credit conditions are lax and shorten considerably when credit conditions become tighter. A sharp departure from the trend in distance between banks and borrowers is indicative of increased risk taking. 

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After seven successful workshops, 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.

Thorsten Beck, Emily Jones , Peter Knaack, 15 October 2018

In today’s world of globalised finance, regulators in developing countries have to weigh up the international ramifications of their decisions. This column presents the results of a research project which combines cross-country panel analysis and in-depth case studies of the political economy of the adoption of Basel II/III in the developing world. It finds that regulators in developing countries do not merely adopt Basel II/III because these standards provide the optimal technical solution to financial stability risks in their jurisdictions; concerns about reputation and competition are also important. 

Peter Koudijs, Laura Salisbury, Gurpal Sran, 06 October 2018

In order to protect the financial system from excessive risk-taking, many argue that bank managers need to have more personal liability. However, whether the liability of bank managers has a significant effect on risk-taking is an open question. This column studies a unique historical episode in which similar bankers, operating in similar institutional and economic environments, faced different degrees of personal liability, depending on the timing of their marriages, and finds that limited liability induced bankers to take more risks.

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.

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