Managing capital flows in a globalized economy. Presentation delivered by Marek Dabrowski at the Course on “Integration in Europe: European Union and Eurasian Union”, Joint Vienna Institute, Vienna, October 23, 2014.
Marek Dabrowski is currently CASE Fellow, Non-Resident Fellow a Bruegel, Fellow at the European Comission-Directorate General for Economic and Financial Affairs, Professor of the Higher School of Economics in Moscow, Chairman of the Supervisory Board of CASE Ukraine in Kiev, and Member of Scientific Council of E.T. Gaidar Institute for Economic Policy in Moscow. Between 1989 and 1990 he served as a First Deputy Minister of Finance of the Republic of Poland. See the full profile here http://www.case-research.eu/en/node/51822
Managing capital flows in a globalized economy. Presentation delivered by Marek Dabrowski at the Course on “Integration in Europe: European Union and Eurasian Union”, Joint Vienna Institute, Vienna, October 23, 2014.
Marek Dabrowski is currently CASE Fellow, Non-Resident Fellow a Bruegel, Fellow at the European Comission-Directorate General for Economic and Financial Affairs, Professor of the Higher School of Economics in Moscow, Chairman of the Supervisory Board of CASE Ukraine in Kiev, and Member of Scientific Council of E.T. Gaidar Institute for Economic Policy in Moscow. Between 1989 and 1990 he served as a First Deputy Minister of Finance of the Republic of Poland. See the full profile here http://www.case-research.eu/en/node/51822
Basel II is the second of the Basel Accords, which are recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision.
This course covers the competitive dynamics and performance of the global banking industry. It's focus is on corporate banking and the financial markets in which major banks do business in. It looks at both regulated and "shadow" banking activities and the impact that the financial crisis has had on reshaping the financial services industry.
It covers the global debt, equity and lending businesses with an emphasis on how these markets and financial products create value for the clients of banking enterprises.
Banking Regulation and Risk Management - Jad DoumithPMILebanonChapter
Banking Regulations and the numerous requirements imposed on banking institutions have been praised by many as indispensable in protecting the various stakeholders of the banking industry. They have also been criticized for burdening the industry with unnecessary limitations which ultimately tend to lower its overall efficiency, in addition to being reactive and short in preventing the successive devastating financial crises. Through a brief overview of the evolution of Banking regulations, the role of this session is to explore the new challenges of the risk management profession in line with the ever changing regulatory environment and its impact on the banking industry, and by extension, the overall economy.
Effect of Deposit Money Bank Failure on Economic Development of Nigeria, 2009...ijtsrd
Deposit money banks plays a vital role in the in economy which involves providing capital for investment thereby improving the well being of the country as such collapse of any bank can affect the economic development of the country. Therefore the study investigated the effect of bank failure on economic development of Nigeria 2009 2019 using secondary data from Nigeria Deposit Insurance Corporation and Statistical bulletin of Central Bank of Nigeria. The research work used the Granger Causality techniques to test the effect between the independent variables Nonperforming loans, Capital Adequacy Ratio and Liquidity Ratio on the dependent variable Unemployment Rate while VAR was used to test the short run relationship. The study found that bank failure granger causes unemployment in Nigeria within the period of the study. The study therefore advocates that banks must ensure they maintain reasonable and acceptable shareholders fund unimpaired by losses at all times and avoid capital erosion. Every loan granted by each of the banks has to be adequately collateralized and the incidence of insider related credits must be deemphasized to avoid loan losses or huge non performing loans. The regulatory authorities on the other hand should engage themselves in capacity building to enable them perform their supervisory and regulatory functions as effectively as possible. The CBN must continue to emphasize and enforce the prudential regulation. Chukwu, Kenechukwu Origin | Obi-Nwosu Victoria O | Chimarume Blessing Ubah "Effect of Deposit Money Bank Failure on Economic Development of Nigeria, 2009-2019" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-5 , August 2021, URL: https://www.ijtsrd.com/papers/ijtsrd46285.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/46285/effect-of-deposit-money-bank-failure-on-economic-development-of-nigeria-20092019/chukwu-kenechukwu-origin
This paper presents two models of key determinants in the evolution of the shadow banking system. First of all, a shadow banking measure is built from a European perspective. Secondly, information on several variables is retrieved basing their selection in previous literature. Thirdly, those variables are grouped in: 1) the base model: real GDP, Institutional investors’ assets, term-spread, banks’ net interest margin and liquidity; and 2) the extended model: the former five plus an indicator of systemic stress, an index of banking concentration and inflation. Finally, regression analysis on those models is conducted for different countries’ samples. Both OLS and panel data analysis is undergone. Results suggest important and consistent geographical differences in relations between shadow banking and key determinant variables’ effects. Thus, this essay provides financial authorities with a valuable benchmark to which they should pay attention before designing optimal policies seeking to reduce the financial risk that shadow banking entails.
Basel II is the second of the Basel Accords, which are recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision.
This course covers the competitive dynamics and performance of the global banking industry. It's focus is on corporate banking and the financial markets in which major banks do business in. It looks at both regulated and "shadow" banking activities and the impact that the financial crisis has had on reshaping the financial services industry.
It covers the global debt, equity and lending businesses with an emphasis on how these markets and financial products create value for the clients of banking enterprises.
Banking Regulation and Risk Management - Jad DoumithPMILebanonChapter
Banking Regulations and the numerous requirements imposed on banking institutions have been praised by many as indispensable in protecting the various stakeholders of the banking industry. They have also been criticized for burdening the industry with unnecessary limitations which ultimately tend to lower its overall efficiency, in addition to being reactive and short in preventing the successive devastating financial crises. Through a brief overview of the evolution of Banking regulations, the role of this session is to explore the new challenges of the risk management profession in line with the ever changing regulatory environment and its impact on the banking industry, and by extension, the overall economy.
Effect of Deposit Money Bank Failure on Economic Development of Nigeria, 2009...ijtsrd
Deposit money banks plays a vital role in the in economy which involves providing capital for investment thereby improving the well being of the country as such collapse of any bank can affect the economic development of the country. Therefore the study investigated the effect of bank failure on economic development of Nigeria 2009 2019 using secondary data from Nigeria Deposit Insurance Corporation and Statistical bulletin of Central Bank of Nigeria. The research work used the Granger Causality techniques to test the effect between the independent variables Nonperforming loans, Capital Adequacy Ratio and Liquidity Ratio on the dependent variable Unemployment Rate while VAR was used to test the short run relationship. The study found that bank failure granger causes unemployment in Nigeria within the period of the study. The study therefore advocates that banks must ensure they maintain reasonable and acceptable shareholders fund unimpaired by losses at all times and avoid capital erosion. Every loan granted by each of the banks has to be adequately collateralized and the incidence of insider related credits must be deemphasized to avoid loan losses or huge non performing loans. The regulatory authorities on the other hand should engage themselves in capacity building to enable them perform their supervisory and regulatory functions as effectively as possible. The CBN must continue to emphasize and enforce the prudential regulation. Chukwu, Kenechukwu Origin | Obi-Nwosu Victoria O | Chimarume Blessing Ubah "Effect of Deposit Money Bank Failure on Economic Development of Nigeria, 2009-2019" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-5 , August 2021, URL: https://www.ijtsrd.com/papers/ijtsrd46285.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/46285/effect-of-deposit-money-bank-failure-on-economic-development-of-nigeria-20092019/chukwu-kenechukwu-origin
This paper presents two models of key determinants in the evolution of the shadow banking system. First of all, a shadow banking measure is built from a European perspective. Secondly, information on several variables is retrieved basing their selection in previous literature. Thirdly, those variables are grouped in: 1) the base model: real GDP, Institutional investors’ assets, term-spread, banks’ net interest margin and liquidity; and 2) the extended model: the former five plus an indicator of systemic stress, an index of banking concentration and inflation. Finally, regression analysis on those models is conducted for different countries’ samples. Both OLS and panel data analysis is undergone. Results suggest important and consistent geographical differences in relations between shadow banking and key determinant variables’ effects. Thus, this essay provides financial authorities with a valuable benchmark to which they should pay attention before designing optimal policies seeking to reduce the financial risk that shadow banking entails.
Shadow Banking and the Global Financial Crisis: The Regulatory Response (Oxfo...J.P. Reimann
This paper studies the shadow banking system and its regulation since the global financial crisis of 2008. The shadow banking system is a newly coined term, that is not yet (or only very scarcely) regulated or defined. It has been remarked that the shadow banking sector played a major part in the leading up to the crisis. While regulators have been quick to introduce stricter rules for banks and insurance companies, the shadow banks have been left largely untouched by new regulations.
The fiscal compact, EU IFIs and the new European Fiscal Board - José Luis Esc...OECD Governance
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Discussion of “Limits to Arbitrage in Sovereign Bonds” by Loriana Pelizzon, M...SYRTO Project
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SYRTO Code Workshop
Workshop on Systemic Risk Policy Issues for SYRTO (Bundesbank-ECB-ESRB)
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Traditionally, quantitative finance practitioners are divided into two populations: those who seek fair values, i.e. means of price distributions, and those who seek risk measures, i.e. quantiles of price distributions. Fair value people and risk people typically live in separate lands, and worship different gods: the profit and loss balance sheet, and regulatory capital, respectively.
Prudent Valuation is a rather unexplored midland which has recently emerged somewhere in between the well known mainlands of Pricing and Risk Management. In fact, the Capital Requirements Regulation (CRR), requires financial institutions to apply prudent valuation to all fair value positions. The difference between the prudent value and the fair value, called Additional Valuation Adjustment (AVA), is directly deducted from the Core Equity Tier 1 (CET1) capital. The Regulatory Technical Standards (RTS) for prudent valuation proposed by the EBA have been adopted by the EU (reg. 2016/101) on 28th Jan. 2016.
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Conference: The Banking Union and the Creation of Duties - Department of Law, Robert Schuman Centre for Advanced Studies, European University Institute
By: Stefano Cappiello, Head of Resolution Unit, EBA
Yannick Lucotte. Is There a Competition-Stability Trade-Off in European Banking?Eesti Pank
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PSB Paris School of Business, France
(with A. Leroy, Laboratoire d’Economie d’Orléans, France)
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The aim of this study is to undertake an up-to-date assessment of market power in Central and Eastern European banking markets and explore how the global financial crisis has affected market power and what has been the impact of foreign ownership. Three main results emerge. First, while there is some convergence in country-level market power during the pre-crisis period, the onset of the global crisis has put an end to this process. Second, bank-level market power appears to vary significantly with respect to ownership characteristics. Third, asset quality and capitalization affect differently the margins in the pre-crisis and crisis periods. While in the pre-crisis period the impacts are similar for all banks regardless of ownership status, in the crisis period non-performing loans have a negative effect and capitalization a positive effect only for domestically-owned banks.
Authored by: Georgios Efthyvoulou, Canan Yildirim
Published in 2013
Presentation delivered by prof. Marc Pagano during 132nd mBank - CASE Seminar "Is Europe Overbanked?" (17.06.2014)
http://www.case-research.eu/en/node/58561
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 Financial Institutions, Markets and Regulation: A Survey | COEURE Workshop on Financial Markets
1. Financial Institutions, Markets and Regulation:
A Survey
by Thorsten Beck, Elena Carletti, and Itay Goldstein
Discussion by Evren Örs (HEC Paris)
COEURE Workshop on Financial Markets
European University Institute
Florence, June 6, 2015
2. Beck, Carletti and Goldstein (2015) discussion by Örs 1
Introduction
- A survey of a vast literature on banking & its regulation
- A major undertaking giving the multi-faceted nature of the subject
- Interaction between theoretical work, empirical findings, and the emerging
regulatory environment
- With a focus on European research
- A very valuable undertaking for the understanding of the
effectiveness of the new EZ regulatory framework being adopted
- Regulatory arbitrage is assured to show its head in the new environment
- Very important to understand the strength and weaknesses of the new system in
an ever-changing financial environment where rule avoidance is common
- Banking theory and empirical evidence help us to the extent they
provide tools for a critical assessment for the question at hand:
- The ever changing nature of banking, shadow banking (and their interaction) and
their regulation while financial innovation keeps on evolving
- What’s at stake is European tax payers’ money
3. Beck, Carletti and Goldstein (2015) discussion by Örs 2
Outline of the Review
1. Introduction
2. What types of market failures does financial regulation tries to address?
2.1 Panics vs. fundamentals related crises
2.2. Inefficient liquidity in the interbank markets
2.3. Interbank interconnectedness, systemic risk, and contagion
2.4. Incentives, bubbles and crises
3. Financial Regulation
3.1. Capital regulation
3.2. Liquidity requirements
3.3. Safety nets: CB interventions and deposit insurance
4. Regulatory reforms: What has been done in the EZ and the EU?
4.1. Capital and liquidity requirements
4.2. Banking union, resolution frameworks, and bail-in instruments
4.3 Activity restrictions
5. The traditional financial system in Europe six years after the Crisis
5.1 Banks vs. markets? A new financial structure debate
5.2. Complexity and globalization
4. Beck, Carletti and Goldstein (2015) discussion by Örs 3
Outline of the Review
6. Financial innovation: regulatory arbitrage & fragility or financial deepening?
7. Regulatory perimeter: Fragility in banks vs markets
8. Creating arbitrage-safe regulatory frameworks
8.1 Complexity vs. simplicity
8.2. Complementary micro- & macro-prudential regulation
8.3. Focus on resolution
8.4. A dynamic approach to regulation
9. Looking forward: what is known, not known, and should be known
9.1. Complexity vs. simplicity
9.2. Complementary micro- & macro-prudential regulation
9.3. Focus on resolution
9.4. A dynamic approach to regulation
5. Beck, Carletti and Goldstein (2015) discussion by Örs 4
First set of comments
- An ambitious project:
- Very timely and very valuable undertaking given the new regulatory
frameworks that are being adopted in the EU and the EZ
- We would like to know how the newly adopted regulations will perform in the
dynamic environment in which banks and shadow banks operate
- Ambitious because the Review spans a large set of inter-related research areas
that need to be related to each other in a limited number of pages
- The authors cover theory and empirical papers, but the balance and the
interactions between the two sets could be improved
- An excellent initiative!
- There is a lot of good research by European researchers that is highly relevant
for public policy that this survey aims to highlight
- We need more resources (funding and data) to contribute further
6. Beck, Carletti and Goldstein (2015) discussion by Örs 5
First set of comments
- Very important topic:
- Lucas, Schwaab & Zhang (2015):
7. Beck, Carletti and Goldstein (2015) discussion by Örs 6
First set of comments
- The structure of the Review
- Currently:
Review of the theoretical literature followed by a coverage of
the empirical evidence, followed by the description of the new
regulatory environment and finally by an assessment of the
new rules and tools.
- An alternative could be:
-Start with a brief description of the new regulatory
environment in the EU/EZ,
-review the literature that’s pertinent/related with each of the
new areas of regulation,
-and then provide a critical assessment of the strengths and
weaknesses of the new set of rules and tools
-what could go wrong in this set-up given what we know from
theoretical and empirical evidence in the literature?
8. Beck, Carletti and Goldstein (2015) discussion by Örs 7
An alternative outline for the Review
1. Introduction
5. The traditional financial system in Europe six years after the Crisis
5.1 Banks vs. markets? A new financial structure debate
5.2. Complexity and globalization
4. Regulatory reforms: What has been done?
4.1. Capital and liquidity requirements
4.2. Banking union, resolution frameworks, and bail-in instruments
4.3 Activity restrictions
8. Creating arbitrage-safe regulatory frameworks
6. Financial innovation: regulatory arbitrage & fragility or financial deepening?
8.1 Complexity vs. simplicity
8.2. Complementary micro- & macro-prudential regulation
8.3. Focus on resolution
8.4. A dynamic approach to regulation
9. Beck, Carletti and Goldstein (2015) discussion by Örs 8
An alternative outline for the Review
3. Financial Regulation
3.1. Capital regulation
2.1 Panics vs. fundamentals related crises
2.4. Incentives, bubbles and crises
3.2. Liquidity requirements
2.2. Inefficient liquidity in the interbank markets
3.3. Safety nets: CB interventions and deposit insurance
7. Regulatory perimeter: Fragility in banks vs markets
2.3. Interbank interconnectedness, systemic risk, and contagion
9. Looking forward: what is known, not known, and should be known
8.1. & 9.1. Complexity vs. simplicity
8.2. & 9.2. Complementary micro- & macro-prudential regulation
8.3. & 9.3. Focus on resolution
8.4. & 9.4. A dynamic approach to regulation
10. Beck, Carletti and Goldstein (2015) discussion by Örs 9
Second set of comments
1. More balance is needed between theory papers vs. empirical work
- Initial parts of the Review are almost exclusively focused on theoretical papers.
- A more blended approach: theory and empirics complement each other
2. Some of the potential sources of new financial risks that might arise
are not in the Review
- LIBOR scandal
- ETFs
- Insurance industry
- Clearing Houses (Centralized Counterparties)
3. Some of the historical facts that are provided not very pertinent to
the EU context, others more relevant could be covered in more detail
- Some of the US history can be shortened,
- Some of the EU context can be further explained/highlighted (with respect to
the US context, for example the case of EZ deposit insurance)
11. Beck, Carletti and Goldstein (2015) discussion by Örs 10
1. More balance between theory and empirical papers
In the interest of time, I’ll just provide some examples:
-Pros & cons of financial integration through banks on real economy
-Morgan, Rime & Strahan (2004), Kerr & Nanda (2009), Michalski & Ors (2012,
2014), Acharya, Imbs & Sturgess (2011)
-Financial crisis affects bank lending to the real sector
Campello, Graham & Harvey (2010), Duchin, Ozbas & Sensoy (2010), Ivashina &
Scharfstein (2010), Cornett, Marcus, McNulty & Tehranian (2011), Puri, Rocholl &
Steffen (2011), Berger & Roman (2015b)
-European integration
-Empirical evidence by Bekaert, Harvey, Lundblad & Siegel (2013), Laeven &
Tressel (2014)
-European banking integration (M&As) and regulatory arbitrage
-Carbo-Valverde, Kane & Rodriguez-Fernandez (2008, 2012)
12. Beck, Carletti and Goldstein (2015) discussion by Örs 11
2. More balance between theory and empirical papers
- Regulatory structures involving banking unions
- US federal vs state bank regulators by Agarwal, Lucca, Seru & Trebbi (2014)
- Theoretical work by Colliard (2015)
- Price of bank liquidity in the EU
Fecht, Nyborg & Rocholl (2011), Cassola, Hortaçsu & Kastl (2013)
- Empirical evidence on flight to quality by investors
- For ex., Baele, Bekaert, Inghelbrecht & Wei (2015)
- (Removal of) government guarantees and bank behavior
- Fischer, Hainz, Rocholl & Steffen (2104), Körner & Schnabel (2013)
- Banks’ risk management and derivative use
- Theoretical work by Vuillemey (2015)
13. Beck, Carletti and Goldstein (2015) discussion by Örs 12
2. More balance between theory and empirical papers
- Sovereign-bank loop/spiral
- For ex., Gray (2014), Kallestrup, Lando & Murgoci (2014), Black, Correa,
Huang & Zhou (2013)
- Effectiveness of liquidity provision through discount window (TAF)
- Berger, Black, Bouwman & Dlugosz (2014)
- Government aid and distortion of bank competition (TARP)
- Berger & Roman (2015a)
- Depositor + firm runs (credit line draw-downs) & bank liquidity risk
- Ippolito, Peydro, Polo & Sette (2015)
- Bank stress tests
14. Beck, Carletti and Goldstein (2015) discussion by Örs 13
2. New problems and sources of risk in the financial system
- Different definitions of shadow banking system, the one I like:
- “Shadow[y] banking is financial activity that is engineered to extract implicit
subsidies from government safety nets. … [It] may also be called Safety-Net
Arbitrage” Kane (2014)
- ETFs
- $ 2.6 trillion in assets worldwide
- In the EU from € 40 billion in 2005 to almost € 400 billion at the end of 2014
!(approx. 50% of the EU market belongs to one company !! )
- Ben-David, Franzoni and Moussavi (2014), Hurlin, Iseli, Pérignon, and Yeung
(2015), Cheng, Massa and Zhang (2015)
- LIBOR scandal: importance of transparency
- $4 trillion LIBOR indexed loans, derivative notional of >$300 trillion
- Duffie, Dworczak and Zhu (2014), Duffie and Stein (2014), Duffie, Skeie and
Vickery (2014), Eisl, Jankowitsch and Subrahmanyam (2014)
15. Beck, Carletti and Goldstein (2015) discussion by Örs 14
2. New sources of risk in the financial system
- Central Counterparties (CCPs) or Clearing Houses
- Duffie, Scheicher & Vuillemey (2015), Boissel, Derrien, Ors & Thesmar
(2015)
16. Beck, Carletti and Goldstein (2015) discussion by Örs 15
Emphasis and de-emphasis
- Given the imposed page limit:
- Some of the US-related historical background could be reduced
- Reg. Q and interest ceilings when covering MMMFs
- Instead, some of the EU-related coverage could be increased
- Deposit insurance differences across EU
- Cross-country DI studies:
Anginer, Demirguc-Kunt, and Zhu (2015),
Demirguc-Kunt, Kane and Laeven (2008),
Demirguc-Kunt and Kane (2002),
Demirguc-Kunt and Detragiache (2002).
17. Beck, Carletti and Goldstein (2015) discussion by Örs 16
Conclusion
- Review paper combines theoretical and empirical papers to help us
better understand that major changes and challenges in EU banking
- Additional critical (and unresolved) issues:
- Harmonization of Deposit Guarantee Systems, pan-EZ DI, ex ante risk-
based premiums, …
- Rapidity with which bank cease & desist orders and resolutions can be
accomplished (SRM/BRRD vs EC-DG Comp, non-representation of
non-CB supervisors in CB Governing Council, political horse-trading), …
- BRRD does not include insurance or CCPs
- National vs EZ resolution trusts/failed asset management companies
- This Review, which is in a preliminary stage, could make an
important contribution for the assessment of the banking union
- Additional resources (funding and data) would further research in
these crucial areas of public policy