Shocks that hit part of the financial system, such as the subprime mortgage market in 2007, can propagate through a complex network of interconnections among financial and non-financial institutions. As the financial crisis of 2007-2009 has shown, the consequences for the entire economy of such systemic risk materializing can be catastrophic. Following the crisis, economists and policymakers have become increasingly aware that the structure of the financial system is a key determinant of systemic risk. A wide consensus now exists among them that network theory is the natural framework for studying systemic risk. Yet, most of the existing rules in financial regulation are still “atomistic,” in that they fail to incorporate the fact that each individual institution is part of a wider network. This article shows that policies building upon insights from network theory (network-sensitive policies) can address systemic risk more effectively than traditional atomistic policies, also in areas where an atomistic approach would seem natural, such as the corporate governance of systemically important financial institutions. In particular, we consider four prescriptions for the governance of systemically important institutions (one on directors’ liability, two on executive compensation and one on failing financial institutions’ shareholders appraisal rights in mergers) and show how making them network-sensitive would both increase their effectiveness in taming systemic risk and better calibrate their impact on individual institutions.
{"title":"Network-Sensitive Financial Regulation","authors":"L. Enriques, A. Romano, Thom Wetzer","doi":"10.2139/ssrn.3411828","DOIUrl":"https://doi.org/10.2139/ssrn.3411828","url":null,"abstract":"Shocks that hit part of the financial system, such as the subprime mortgage market in 2007, can propagate through a complex network of interconnections among financial and non-financial institutions. As the financial crisis of 2007-2009 has shown, the consequences for the entire economy of such systemic risk materializing can be catastrophic. Following the crisis, economists and policymakers have become increasingly aware that the structure of the financial system is a key determinant of systemic risk. A wide consensus now exists among them that network theory is the natural framework for studying systemic risk. Yet, most of the existing rules in financial regulation are still “atomistic,” in that they fail to incorporate the fact that each individual institution is part of a wider network. \u0000 \u0000This article shows that policies building upon insights from network theory (network-sensitive policies) can address systemic risk more effectively than traditional atomistic policies, also in areas where an atomistic approach would seem natural, such as the corporate governance of systemically important financial institutions. In particular, we consider four prescriptions for the governance of systemically important institutions (one on directors’ liability, two on executive compensation and one on failing financial institutions’ shareholders appraisal rights in mergers) and show how making them network-sensitive would both increase their effectiveness in taming systemic risk and better calibrate their impact on individual institutions.","PeriodicalId":376194,"journal":{"name":"ERN: Regulation & Supervision (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-05-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126074428","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Apolline Blandin, A. S. Cloots, Hatim Hussain, Michel Rauchs, Rasheed Saleuddin, J. Allen, B. Zhang, Katherine Cloud
The first global comparative study of cryptoasset regulation by the Cambridge Centre for Alternative Finance provides a comprehensive, systematic, and comparative analysis of the current regulatory landscape of cryptoassets and related activities. The study covers 23 jurisdictions and is based on both desktop research and in-person interviews with regulators and policymakers. The report aims to compare and contrast various regulatory approaches and practices with regards to cryptoassets in a number of jurisdictions and shed light on current regulatory challenges and opportunities. The study serves as a practical and analytical tool for regulators, market participants, and other stakeholders in the cryptoasset ecosystem. Section 1 sets out a theoretical framework to conceptualise cryptoassets and related activities. It looks at three key aspects in a regulatory context: (1) the nature and form of cryptoassets, (2) the issuance of cryptoassets, and (3) intermediated activities in the life cycle of cryptoassets. A number of regulatory recommendations are brought forward. Section 2 provides a global comparative analysis of cryptoasset regulation in 23 jurisdictions. It examines regulatory authorities regulating cryptoassets, their current definition and classification of cryptoassets and related activities, as well as regulatory processes and responses (e.g. existing regulation, retrofitted regulation, bespoke regulation and bespoke regulatory regime). Section 3 highlights some of the most salient challenges and potential gaps that stem from the development and implementation of cryptoasset regulation. Section 4 consists of an in-depth analysis of cryptoasset regulations in 23 jurisdictions that constitute the backbone of the comparative analysis.
剑桥替代金融中心(Cambridge Centre for Alternative Finance)首次对加密资产监管进行了全球比较研究，对加密资产及相关活动的当前监管格局进行了全面、系统和比较分析。这项研究涵盖了23个司法管辖区，基于桌面研究和对监管机构和政策制定者的亲自采访。该报告旨在比较和对比多个司法管辖区关于加密资产的各种监管方法和做法，并阐明当前的监管挑战和机遇。该研究为监管机构、市场参与者和加密资产生态系统中的其他利益相关者提供了实用和分析工具。第1节提出了一个概念化加密资产和相关活动的理论框架。它着眼于监管背景下的三个关键方面:(1)加密资产的性质和形式，(2)加密资产的发行，以及(3)加密资产生命周期中的中介活动。提出了一些监管建议。第2节对23个司法管辖区的加密资产监管进行了全球比较分析。它审查了监管加密资产的监管机构，其当前对加密资产和相关活动的定义和分类，以及监管流程和响应(例如现有监管、改进监管、定制监管和定制监管制度)。第3节重点介绍了加密资产监管的发展和实施所带来的一些最突出的挑战和潜在差距。第4节包括对23个司法管辖区的加密资产法规的深入分析，这些法规构成了比较分析的支柱。
{"title":"Global Cryptoasset Regulatory Landscape Study","authors":"Apolline Blandin, A. S. Cloots, Hatim Hussain, Michel Rauchs, Rasheed Saleuddin, J. Allen, B. Zhang, Katherine Cloud","doi":"10.2139/SSRN.3379219","DOIUrl":"https://doi.org/10.2139/SSRN.3379219","url":null,"abstract":"The first global comparative study of cryptoasset regulation by the Cambridge Centre for Alternative Finance provides a comprehensive, systematic, and comparative analysis of the current regulatory landscape of cryptoassets and related activities. The study covers 23 jurisdictions and is based on both desktop research and in-person interviews with regulators and policymakers. The report aims to compare and contrast various regulatory approaches and practices with regards to cryptoassets in a number of jurisdictions and shed light on current regulatory challenges and opportunities. The study serves as a practical and analytical tool for regulators, market participants, and other stakeholders in the cryptoasset ecosystem. Section 1 sets out a theoretical framework to conceptualise cryptoassets and related activities. It looks at three key aspects in a regulatory context: (1) the nature and form of cryptoassets, (2) the issuance of cryptoassets, and (3) intermediated activities in the life cycle of cryptoassets. A number of regulatory recommendations are brought forward. Section 2 provides a global comparative analysis of cryptoasset regulation in 23 jurisdictions. It examines regulatory authorities regulating cryptoassets, their current definition and classification of cryptoassets and related activities, as well as regulatory processes and responses (e.g. existing regulation, retrofitted regulation, bespoke regulation and bespoke regulatory regime). Section 3 highlights some of the most salient challenges and potential gaps that stem from the development and implementation of cryptoasset regulation. Section 4 consists of an in-depth analysis of cryptoasset regulations in 23 jurisdictions that constitute the backbone of the comparative analysis.","PeriodicalId":376194,"journal":{"name":"ERN: Regulation & Supervision (Topic)","volume":"19 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-04-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126837854","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Salvador Marín Hernández, Ester Gras Gil, Esther Ortiz Martínez
espanolEn este trabajo pretendemos comprobar si los cambios en la regulacion financiera prudencial en Espana en el periodo 1995-2015 han tenido efectos en la estabilidad financiera y si esta puede valorarse con el comportamiento de las variables Zscore y LLP en el caso espanol, al igual que se realiza en otras realidades internacionales. Para ello abordamos el analisis de la implantacion de la provision estadistica o dinamica en el ano 2000 y la adopcion de Basilea en 2008. La muestra analizada esta compuesta por 48 bancos espanoles. Como principales conclusiones aportamos evidencias de que los cambios que se han producido en la regulacion financiera prudencial en Espana no pueden ser analizados e interpretados adecuadamente con el comportamiento de las variables Zscore y LLP, para ese periodo, ya que en este contexto no son un buen indicador de la mayor o menor estabilidad financiera por las interferencias del regulador bancario espanol. EnglishIn this paper, we seek to ascertain whether the changes in prudential financial regulation in Spain in the period 1995–2015 have had an effect on financial stability and whether this can be assessed for Spain from the behaviour of the z-score and the LLP variables, as has been done elsewhere. We analyse the implementation of the statistical or dynamic provision in 2000 and also the adoption of the Basel II agreement in 2008. The sample analysed comprises 48 Spanish banks. As our main conclusions, we provide evidence that the changes that have taken place in prudential financial regulation in Spain cannot be adequately analysed and interpreted with the behaviour of the z-score and LLP variables for that period, since in this context they are not good indicators of greater or lesser financial stability due to interference from the Spanish banking regulator
espanolEn这个工作我们看看是否变化regulacion金融审慎估计影响期间一直在西班牙在金融稳定,如果这有一个变量与行为予以Zscore LLP在西班牙的情况下,如同在其他国际现实。本研究的目的是分析在2000年实施统计或动态条款和2008年采用巴塞尔协议的情况。本研究的目的是评估西班牙银行在金融市场上的表现。作为主要结论提供证据表明变化发生在regulacion西班牙不能审慎的财务分析和解释变量的行为正确Zscore LLP,那段时间,因为在这方面不是一个好指标或大或小的金融稳定为西班牙银行监管的干扰。在本文中，我们试图确定1995 - 2015年期间西班牙审慎金融监管的变化是否对金融稳定产生了影响，以及是否可以从z-score和LLP变量的行为对西班牙进行评估，就像其他地方所做的那样。我们分析了2000年统计或动态条款的执行情况以及2008年巴塞尔协议II的通过情况。分析的样本包括48个西班牙银行。As our main,我们提供证据的结论place in the changes that have采取审慎financial regulation in Spain cannot be第项analysed and interpreted with the行为of the有所and for that period,可变LLP in this context they are not good indicators of greater or由于干涉from the lesser financial stability)的西班牙银行监管机构
{"title":"Regulación prudencial e información financiera en la banca española: 1995-2015 (Prudential Regulation and Financial Information in Spanish Banks: 1995–2015)","authors":"Salvador Marín Hernández, Ester Gras Gil, Esther Ortiz Martínez","doi":"10.2139/ssrn.3361111","DOIUrl":"https://doi.org/10.2139/ssrn.3361111","url":null,"abstract":"espanolEn este trabajo pretendemos comprobar si los cambios en la regulacion financiera prudencial en Espana en el periodo 1995-2015 han tenido efectos en la estabilidad financiera y si esta puede valorarse con el comportamiento de las variables Zscore y LLP en el caso espanol, al igual que se realiza en otras realidades internacionales. Para ello abordamos el analisis de la implantacion de la provision estadistica o dinamica en el ano 2000 y la adopcion de Basilea en 2008. La muestra analizada esta compuesta por 48 bancos espanoles. Como principales conclusiones aportamos evidencias de que los cambios que se han producido en la regulacion financiera prudencial en Espana no pueden ser analizados e interpretados adecuadamente con el comportamiento de las variables Zscore y LLP, para ese periodo, ya que en este contexto no son un buen indicador de la mayor o menor estabilidad financiera por las interferencias del regulador bancario espanol. EnglishIn this paper, we seek to ascertain whether the changes in prudential financial regulation in Spain in the period 1995–2015 have had an effect on financial stability and whether this can be assessed for Spain from the behaviour of the z-score and the LLP variables, as has been done elsewhere. We analyse the implementation of the statistical or dynamic provision in 2000 and also the adoption of the Basel II agreement in 2008. The sample analysed comprises 48 Spanish banks. As our main conclusions, we provide evidence that the changes that have taken place in prudential financial regulation in Spain cannot be adequately analysed and interpreted with the behaviour of the z-score and LLP variables for that period, since in this context they are not good indicators of greater or lesser financial stability due to interference from the Spanish banking regulator","PeriodicalId":376194,"journal":{"name":"ERN: Regulation & Supervision (Topic)","volume":"263 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-03-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131734831","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines the effects of changes in bank regulatory environment on the risk, return, and liquidity characteristics of equity portfolios of U.S. bank holding companies between 1997 and 2016. Using a comprehensive sample of bank and hedge fund holdings data we examine the impact of the repeal of the Glass-Steagall Act, the introduction of the second and third Basel Capital Accords, and the implementation of the Dodd-Frank legislation on institutional portfolios. We document a significant increase in both the idiosyncratic volatility and illiquidity of banks' portfolios during the period of financial deregulation initiated by the formal removal of restrictions prohibiting banks from engaging in securities trading. In contrast, subsequent reforms of the bank capital requirements system and the prohibition of banks from proprietary trading activities lead to reductions in those metrics. Our results suggest that banks' restricted ability to engage in market-making can be offset by the activities of hedge funds, although the consequences of this substitution for long-term market stability remain unclear.
本文考察了1997 - 2016年间银行监管环境的变化对美国银行控股公司股权投资组合的风险、收益和流动性特征的影响。利用银行和对冲基金持股数据的综合样本，我们研究了《格拉斯-斯蒂格尔法案》(Glass-Steagall Act)的废除、《巴塞尔资本协议》(Basel Capital Accords)第二和第三版的引入以及《多德-弗兰克法案》(Dodd-Frank Act)对机构投资组合的影响。在正式取消禁止银行从事证券交易的限制所引发的金融放松管制期间，我们记录了银行投资组合的特殊波动性和非流动性的显著增加。相比之下，随后对银行资本要求制度的改革和对银行自营交易活动的禁止导致了这些指标的减少。我们的研究结果表明，银行从事做市的有限能力可以被对冲基金的活动所抵消，尽管这种替代对长期市场稳定的影响尚不清楚。
{"title":"Bank Regulatory Reforms and Institutional Equity Holdings","authors":"M. Bowe, O. Kolokolova, Marcin Michalski","doi":"10.2139/ssrn.3347073","DOIUrl":"https://doi.org/10.2139/ssrn.3347073","url":null,"abstract":"This paper examines the effects of changes in bank regulatory environment on the risk, return, and liquidity characteristics of equity portfolios of U.S. bank holding companies between 1997 and 2016. Using a comprehensive sample of bank and hedge fund holdings data we examine the impact of the repeal of the Glass-Steagall Act, the introduction of the second and third Basel Capital Accords, and the implementation of the Dodd-Frank legislation on institutional portfolios. We document a significant increase in both the idiosyncratic volatility and illiquidity of banks' portfolios during the period of financial deregulation initiated by the formal removal of restrictions prohibiting banks from engaging in securities trading. In contrast, subsequent reforms of the bank capital requirements system and the prohibition of banks from proprietary trading activities lead to reductions in those metrics. Our results suggest that banks' restricted ability to engage in market-making can be offset by the activities of hedge funds, although the consequences of this substitution for long-term market stability remain unclear.","PeriodicalId":376194,"journal":{"name":"ERN: Regulation & Supervision (Topic)","volume":"34 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-03-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122378197","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper reveals the underlying dynamics between the capital buffer and bank performance in EU-27 countries. A dynamic panel analysis shows that capital buffer is significantly affected by bank performance and risk exposure. Remarkably, a threshold analysis identifies regime changes for the underlying relationships during the financial crisis of 2008. We find a positive relationship between the capital buffer and performance for banks that fall in the low performance regime, while a negative relationship is reported for the banks that belong to the high regime. Threshold results also show that buffer exerts a positive impact on bank performance. Although regulation reforms that aim to raise the capital requirements could improve bank performance and stability, these improvements are not homogeneous across banks.
{"title":"The Nexus Between Underlying Dynamics of Bank Capital Buffer and Performance","authors":"E. Mamatzakis, Anna Bagntasarian","doi":"10.2139/ssrn.3345021","DOIUrl":"https://doi.org/10.2139/ssrn.3345021","url":null,"abstract":"This paper reveals the underlying dynamics between the capital buffer and bank performance in EU-27 countries. A dynamic panel analysis shows that capital buffer is significantly affected by bank performance and risk exposure. Remarkably, a threshold analysis identifies regime changes for the underlying relationships during the financial crisis of 2008. We find a positive relationship between the capital buffer and performance for banks that fall in the low performance regime, while a negative relationship is reported for the banks that belong to the high regime. Threshold results also show that buffer exerts a positive impact on bank performance. Although regulation reforms that aim to raise the capital requirements could improve bank performance and stability, these improvements are not homogeneous across banks.","PeriodicalId":376194,"journal":{"name":"ERN: Regulation & Supervision (Topic)","volume":"26 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132642020","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Christopher C. Henderson, Shaohui Jia, Charles Mattioli
The protracted period of stability in the banking sector since the Great Recession, accompanied by the evolving time path of interest rates, makes understanding the causes and timing of the next economic downturn particularly acute for regulatory agencies. The development and implementation of supervisory ratings models is critical in providing a first response by regulatory agencies to shift examination resources to those institutions that pose the greatest risk to bank solvency or financial stability. In alignment with the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018, examiners could enhance prudential regulation standards through data-enhanced activities to monitor inherent and emerging risk, especially at small depository institutions and holding companies where reduced reporting requirements and extended examination cycles have been implemented under the Act. The results of this paper show that robust forward-looking statistical models are superior to backward-looking assessments of supervisory compliance, which could lead to less regulatory burden when integrated into the examination process, particularly at smaller institutions.
{"title":"Supervisory Bank Risk Early Warning Modeling: An Examiner’s FIrst Line of Defense","authors":"Christopher C. Henderson, Shaohui Jia, Charles Mattioli","doi":"10.21314/jcr.2020.270","DOIUrl":"https://doi.org/10.21314/jcr.2020.270","url":null,"abstract":"The protracted period of stability in the banking sector since the Great Recession, accompanied by the evolving time path of interest rates, makes understanding the causes and timing of the next economic downturn particularly acute for regulatory agencies. The development and implementation of supervisory ratings models is critical in providing a first response by regulatory agencies to shift examination resources to those institutions that pose the greatest risk to bank solvency or financial stability. In alignment with the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018, examiners could enhance prudential regulation standards through data-enhanced activities to monitor inherent and emerging risk, especially at small depository institutions and holding companies where reduced reporting requirements and extended examination cycles have been implemented under the Act. The results of this paper show that robust forward-looking statistical models are superior to backward-looking assessments of supervisory compliance, which could lead to less regulatory burden when integrated into the examination process, particularly at smaller institutions.<br>","PeriodicalId":376194,"journal":{"name":"ERN: Regulation & Supervision (Topic)","volume":"39 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-01-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127778499","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We review the legal and regulatory framework covering alternative (‘peer-to-peer’ or ‘marketplace’) lending platforms in the US, China, the UK and more briefly other countries. The main regulatory concerns are (i) enforcing consumer credit rules for unsecured personal lending; and (ii) protection of uninformed retail investors from mis-selling and platform failure. Alternative lending was first established with little regulatory oversight, but there has been substantial reregulation – first in the US via the 2008 SEC decision that platform investments are securities; subsequently in the UK, China and other countries. We anticipate further reregulation to protect retail investors, limiting the funding of loans from the ‘crowd’. Promoting credit supply through alternative lending platforms requires also institutional investor participation and embracing the use of technology in platform regulation (‘RegTech’).
{"title":"Growing Pains: The Changing Regulation of Alternative Lending Platforms","authors":"Ding Chen, Anil Kavuri, A. Milne","doi":"10.2139/ssrn.3315738","DOIUrl":"https://doi.org/10.2139/ssrn.3315738","url":null,"abstract":"We review the legal and regulatory framework covering alternative (‘peer-to-peer’ or ‘marketplace’) lending platforms in the US, China, the UK and more briefly other countries. The main regulatory concerns are (i) enforcing consumer credit rules for unsecured personal lending; and (ii) protection of uninformed retail investors from mis-selling and platform failure. Alternative lending was first established with little regulatory oversight, but there has been substantial reregulation – first in the US via the 2008 SEC decision that platform investments are securities; subsequently in the UK, China and other countries. We anticipate further reregulation to protect retail investors, limiting the funding of loans from the ‘crowd’. Promoting credit supply through alternative lending platforms requires also institutional investor participation and embracing the use of technology in platform regulation (‘RegTech’).","PeriodicalId":376194,"journal":{"name":"ERN: Regulation & Supervision (Topic)","volume":"259 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-01-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122680551","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-01-07DOI: 10.1093/OXFORDHB/9780190626198.013.1
D. Mayes, P. Siklos, J. Sturm
This chapter covers central bank topics including governance, independence, balance-sheet and crisis management, and challenges in macroeconomic modeling. It is intended as a summary of current and potential challenges faced by central banks in monetary policy and maintenance of financial system stability. The chapter covers a variety of views about past and present behavior and performance of central banks around the world, providing a state-of-the-art perspective on likely future challenges to be faced by this critical institution. The chapter points out gaps where future research is likely to be fruitful and the questions and issues that remain unanswered. One motivation for the book is the financial crisis of 2007–2009. Nevertheless, several themes covered and analyzed predate the crisis. The aftermath of the crisis also raised new questions about the scope, influence, and response of central banks in a changing macroeconomic landscape. The chapter also touches on fintech and digital currencies.
{"title":"Central Banking's Long March Over the Decades","authors":"D. Mayes, P. Siklos, J. Sturm","doi":"10.1093/OXFORDHB/9780190626198.013.1","DOIUrl":"https://doi.org/10.1093/OXFORDHB/9780190626198.013.1","url":null,"abstract":"This chapter covers central bank topics including governance, independence, balance-sheet and crisis management, and challenges in macroeconomic modeling. It is intended as a summary of current and potential challenges faced by central banks in monetary policy and maintenance of financial system stability. The chapter covers a variety of views about past and present behavior and performance of central banks around the world, providing a state-of-the-art perspective on likely future challenges to be faced by this critical institution. The chapter points out gaps where future research is likely to be fruitful and the questions and issues that remain unanswered. One motivation for the book is the financial crisis of 2007–2009. Nevertheless, several themes covered and analyzed predate the crisis. The aftermath of the crisis also raised new questions about the scope, influence, and response of central banks in a changing macroeconomic landscape. The chapter also touches on fintech and digital currencies.","PeriodicalId":376194,"journal":{"name":"ERN: Regulation & Supervision (Topic)","volume":"56 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-01-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123167852","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using both market-wide and firm-level illiquidity measures of the stock, bond, and CDS markets, we find that the co-movements of illiquidity across markets increase significantly during the recent global financial crisis. Moreover, the degree of co-movements remains significantly higher in the post-crisis period and regulatory period than in the pre-crisis period. Specifically, the distribution of firm-level co-movements is notably different before and after the crisis (e.g., a much larger portion of firms with positive pairwise correlations between illiquidity measures in the post-crisis period than in the pre-crisis period). Our results provide suggestive evidence of the effects of financial crisis and the subsequent post-crisis regulations on the co-movements of illiquidity across markets.
{"title":"The Co-Movements of Stock, Bond, and CDS Illiquidity Before, During and After the Global Financial Crisis","authors":"Xinjie Wang, Yangru Wu, Z. Zhong","doi":"10.2139/ssrn.3299766","DOIUrl":"https://doi.org/10.2139/ssrn.3299766","url":null,"abstract":"Using both market-wide and firm-level illiquidity measures of the stock, bond, and CDS markets, we find that the co-movements of illiquidity across markets increase significantly during the recent global financial crisis. Moreover, the degree of co-movements remains significantly higher in the post-crisis period and regulatory period than in the pre-crisis period. Specifically, the distribution of firm-level co-movements is notably different before and after the crisis (e.g., a much larger portion of firms with positive pairwise correlations between illiquidity measures in the post-crisis period than in the pre-crisis period). Our results provide suggestive evidence of the effects of financial crisis and the subsequent post-crisis regulations on the co-movements of illiquidity across markets.","PeriodicalId":376194,"journal":{"name":"ERN: Regulation & Supervision (Topic)","volume":"103 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-12-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131911873","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper attempts to propose a measure of “optimality of bank financial structure” as a proxy of regulation fairness, in terms of the “theory of the banking firm” under constraints of liquidity and capital adequacy. This has been conducted using Lagrange function to assess the optimal weights of assets that include cash, governmental investments, loans, non-governmental investments and other assets, and the optimal weights of liabilities that include deposits, equity and other liabilities. The paper argues that “optimality of bank financial structure” may affect both of “banking efficiency” and “financial stability”. This has been conducted using a sample of 15 countries, over the periods from the 2004 to 2015. Using panel analysis according to OLS and GMM techniques, results indicate that hypotheses regarding the significance of this impact could be accepted.
{"title":"Asset Allocation, Capital Structure, Theory of the Firm and Banking Performance: A Panel Analysis","authors":"N. Alber","doi":"10.2139/ssrn.3292928","DOIUrl":"https://doi.org/10.2139/ssrn.3292928","url":null,"abstract":"This paper attempts to propose a measure of “optimality of bank financial structure” as a proxy of regulation fairness, in terms of the “theory of the banking firm” under constraints of liquidity and capital adequacy. This has been conducted using Lagrange function to assess the optimal weights of assets that include cash, governmental investments, loans, non-governmental investments and other assets, and the optimal weights of liabilities that include deposits, equity and other liabilities. The paper argues that “optimality of bank financial structure” may affect both of “banking efficiency” and “financial stability”. This has been conducted using a sample of 15 countries, over the periods from the 2004 to 2015. Using panel analysis according to OLS and GMM techniques, results indicate that hypotheses regarding the significance of this impact could be accepted.","PeriodicalId":376194,"journal":{"name":"ERN: Regulation & Supervision (Topic)","volume":"91 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-11-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126176293","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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