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International Evidence On Government Support And Risk Taking In The Banking Sector
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Book Synopsis International Evidence on Government Support and Risk Taking in the Banking Sector by : Mr.Luis Brandão Brandao Marques
Download or read book International Evidence on Government Support and Risk Taking in the Banking Sector written by Mr.Luis Brandão Brandao Marques and published by International Monetary Fund. This book was released on 2013-05-02 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: Government support to banks through the provision of explicit or implicit guarantees affects the willingness of banks to take on risk by reducing market discipline or by increasing charter value. We use an international sample of bank data and government support to banks for the periods 2003-2004 and 2009-2010. We find that more government support is associated with more risk taking by banks, especially during the financial crisis (2009-10). We also find that restricting banks' range of activities ameliorates the moral hazard problem. We conclude that strengthening market discipline in the banking sector is needed to address this moral hazard problem.
Book Synopsis International Evidence on Government Support and Risk Taking in the Banking Sector by : Luís Brandão Marques
Download or read book International Evidence on Government Support and Risk Taking in the Banking Sector written by Luís Brandão Marques and published by . This book was released on 2013 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Bank Leverage and Monetary Policy's Risk-Taking Channel by : Mr.Giovanni Dell'Ariccia
Download or read book Bank Leverage and Monetary Policy's Risk-Taking Channel written by Mr.Giovanni Dell'Ariccia and published by International Monetary Fund. This book was released on 2013-06-06 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: We present evidence of a risk-taking channel of monetary policy for the U.S. banking system. We use confidential data on the internal ratings of U.S. banks on loans to businesses over the period 1997 to 2011 from the Federal Reserve’s survey of terms of business lending. We find that ex-ante risk taking by banks (as measured by the risk rating of the bank’s loan portfolio) is negatively associated with increases in short-term policy interest rates. This relationship is less pronounced for banks with relatively low capital or during periods when banks’ capital erodes, such as episodes of financial and economic distress. These results contribute to the ongoing debate on the role of monetary policy in financial stability and suggest that monetary policy has a bearing on the riskiness of banks and financial stability more generally.
Book Synopsis Sovereign Risk and Bank Risk-Taking by : Mr.Anil Ari
Download or read book Sovereign Risk and Bank Risk-Taking written by Mr.Anil Ari and published by International Monetary Fund. This book was released on 2017-12-14 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: I propose a dynamic general equilibrium model in which strategic interactions between banks and depositors may lead to endogenous bank fragility and slow recovery from crises. When banks' investment decisions are not contractible, depositors form expectations about bank risk-taking and demand a return on deposits according to their risk. This creates strategic complementarities and possibly multiple equilibria: in response to an increase in funding costs, banks may optimally choose to pursue risky portfolios that undermine their solvency prospects. In a bad equilibrium, high funding costs hinder the accumulation of bank net worth, leading to a persistent drop in investment and output. I bring the model to bear on the European sovereign debt crisis, in the course of which under-capitalized banks in defaultrisky countries experienced an increase in funding costs and raised their holdings of domestic government debt. The model is quantified using Portuguese data and accounts for macroeconomic dynamics in Portugal in 2010-2016. Policy interventions face a trade-off between alleviating banks' funding conditions and strengthening risk-taking incentives. Liquidity provision to banks may eliminate the good equilibrium when not targeted. Targeted interventions have the capacity to eliminate adverse equilibria.
Book Synopsis Bank Size and Systemic Risk by : Mr.Luc Laeven
Download or read book Bank Size and Systemic Risk written by Mr.Luc Laeven and published by International Monetary Fund. This book was released on 2014-05-08 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: The proposed SDN documents the evolution of bank size and activities over the past 20 years. It discusses whether this evolution can be explained by economies of scale or “too big to fail” subsidies. The paper then presents evidence on the extent to which bank size and market-based activities contribute to systemic risk. The paper concludes with policy messages in the area of capital regulation and activity restrictions to reduce the systemic risk posed by large banks. The analysis of the paper complements earlier Fund work, including SDN 13/04 and the recent GFSR chapter on “too big to fail” subsidies, and its policy message is in line with this earlier work.
Book Synopsis Powering the Digital Economy: Opportunities and Risks of Artificial Intelligence in Finance by : El Bachir Boukherouaa
Download or read book Powering the Digital Economy: Opportunities and Risks of Artificial Intelligence in Finance written by El Bachir Boukherouaa and published by International Monetary Fund. This book was released on 2021-10-22 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper discusses the impact of the rapid adoption of artificial intelligence (AI) and machine learning (ML) in the financial sector. It highlights the benefits these technologies bring in terms of financial deepening and efficiency, while raising concerns about its potential in widening the digital divide between advanced and developing economies. The paper advances the discussion on the impact of this technology by distilling and categorizing the unique risks that it could pose to the integrity and stability of the financial system, policy challenges, and potential regulatory approaches. The evolving nature of this technology and its application in finance means that the full extent of its strengths and weaknesses is yet to be fully understood. Given the risk of unexpected pitfalls, countries will need to strengthen prudential oversight.
Book Synopsis Bovernance and Bank Valuation by : Gerard Caprio
Download or read book Bovernance and Bank Valuation written by Gerard Caprio and published by World Bank Publications. This book was released on 2003 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Which public policies and ownership structures enhance the governance of banks? This paper constructs a new database on the ownership of banks internationally and then assesses the ramifications of ownership, shareholder protection laws, and supervisory/regulatory policies on bank valuations. Except in a few countries with very strong shareholder protection laws, banks are not widely held, but rather families or the State tend to control banks. We find that (i) larger cash flow rights by the controlling owner boosts valuations, (ii) stronger shareholder protection laws increase valuations, and (iii) greater cash flow rights mitigate the adverse effects of weak shareholder protection laws on bank valuations. These results are consistent with the views that expropriation of minority shareholders is important internationally, that laws can restrain this expropriation, and concentrated cash flow rights represent an important mechanism for governing banks. Finally, the evidence does not support the view that empowering official supervisory and regulatory agencies will increase the market valuation of banks"--NBER website
Book Synopsis The Political Economy of Bank Regulation in Developing Countries by : Emily Jones
Download or read book The Political Economy of Bank Regulation in Developing Countries written by Emily Jones and published by Oxford University Press. This book was released on 2020 with total page 405 pages. Available in PDF, EPUB and Kindle. Book excerpt: This is an open access title available under the terms of a CC BY-NC-ND 4.0 International licence. It is free to read at Oxford Scholarship Online and offered as a free PDF download from OUP and selected open access locations.International banking standards are intended for the regulation of large, complex, risk-taking international banks with trillions of dollars in assets and operations across the globe. Yet they are being implemented in countries with nascent financial markets and small banks that have yet to ventureinto international markets. Why is this? This book develops a new framework to explain regulatory interdependence between countries in the core and the periphery of the global financial system. Drawing on in-depth analysis of eleven countries across Africa, Asia, and Latin America, it shows howfinancial globalisation generates strong reputational and competitive incentives for developing countries to converge on international standards. It explains how specific cross-border relations between regulators, politicians, and banks within developing countries, and international actors includinginvestors, peer regulators, and international financial institutions, generate regulatory interdependence. It explains why some configurations of domestic politics and forms of integration into global finance generate convergence with international standards, while other configurations lead todivergence. This book contributes to our understanding of the ways in which governments and firms in the core of global finance powerfully shape regulatory decisions in the periphery, and the ways that governments and firms from peripheral developing countries manoeuvre within the constraints andopportunities created by financial globalisation.
Book Synopsis Bank Risk-Taking and Competition Revisited by : Mr.Gianni De Nicolo
Download or read book Bank Risk-Taking and Competition Revisited written by Mr.Gianni De Nicolo and published by International Monetary Fund. This book was released on 2006-12-01 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies two new models in which banks face a non-trivial asset allocation decision. The first model (CVH) predicts a negative relationship between banks' risk of failure and concentration, indicating a trade-off between competition and stability. The second model (BDN) predicts a positive relationship, suggesting no such trade-off exists. Both models can predict a negative relationship between concentration and bank loan-to-asset ratios, and a nonmonotonic relationship between bank concentration and profitability. We explore these predictions empirically using a cross-sectional sample of about 2,500 U.S. banks in 2003 and a panel data set of about 2,600 banks in 134 nonindustrialized countries for 1993-2004. In both these samples, we find that banks' probability of failure is positively and significantly related to concentration, loan-to-asset ratios are negatively and significantly related to concentration, and bank profits are positively and significantly related to concentration. Thus, the risk predictions of the CVH model are rejected, those of the BDN model are not, there is no trade-off between bank competition and stability, and bank competition fosters the willingness of banks to lend.
Book Synopsis The Federal Home Loan Bank System by : Deborah Cohen
Download or read book The Federal Home Loan Bank System written by Deborah Cohen and published by . This book was released on 1980 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Taking Stock of Risk Management Techniques for Sovereigns by : Stijn Claessens
Download or read book Taking Stock of Risk Management Techniques for Sovereigns written by Stijn Claessens and published by World Bank Publications. This book was released on 2005 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper reviews the current state of affairs and thinking on external risk management for developing countries. It tries to identify the reasons behind the limited risk management by sovereigns. Perverse incentives arising from a too generous international safety net, limited access to international financial markets by developing countries arising from low creditworthiness, a limited supply of financial risk management tools suited to developing countries, and a poor supply of skills have inhibited risk management. Another constraint has been the limited attention given to the strategic objectives for risk management. Going forward, the paper identifies actions by international financial markets, countries and international financial institutions that can help improve risk management.
Book Synopsis Banking Resilience: New Insights On Corporate Governance, Sustainability And Digital Innovation by : Sabri Boubaker
Download or read book Banking Resilience: New Insights On Corporate Governance, Sustainability And Digital Innovation written by Sabri Boubaker and published by World Scientific. This book was released on 2024-01-23 with total page 534 pages. Available in PDF, EPUB and Kindle. Book excerpt: The banking industry plays a critical role in ensuring global economic and financial stability. Effective governance is essential for mitigating bank risk-taking and limiting managerial opportunism in this industry, which is constantly under regulatory and market scrutiny. However, the complexity and diversity of banking financial instruments and transactions gives rise to substantial information asymmetries and ongoing debates regarding contemporary governance, sustainability, and data innovation issues.This book is one of the first to address these contemporary issues collectively, offering a comprehensive and holistic understanding of the challenges and opportunities facing the global banking industry. It provides new insights, evidence-based recommendations, and future perspectives on the role of governance mechanisms, digital innovation, climate change, and green finance in shaping the industry pre- and post-COVID-19. The book is a valuable resource for a wide range of stakeholders in the banking sector, including international regulators, practitioners, policymakers, institutional investors, and auditors. It features contributions from renowned international scholars and offers a variety of theoretical, empirical, and policy-based perspectives. It provides updated evidence and new insights crucial for rethinking the global banking model and dominant regulations, and offers evidence-based recommendations and measures for promoting financial stability and resilience in this industry.
Download or read book Banks at Risk written by Peter Hoflich and published by John Wiley & Sons. This book was released on 2012-11-28 with total page 249 pages. Available in PDF, EPUB and Kindle. Book excerpt: Ideas on how to reform the financial services industry, from experts on the inside In the wake of the financial crisis of 2008 the practices of the entire global financial services industry have been called into question. From the government, to the media, to the general public, everyone is re-thinking the way forward for the financial sector, but the stakes are high. Should negative trends in the industry continue and financial innovations allow fallout from the next crisis to grow exponentially, the endgame could be the sort of mutually assured destruction that topples entire economies. Charting the way forward for financial services reform requires a fundamental reappraisal of how things are done in order to avert disaster in the near future, and Banks at Risk: Global Best Practices in an Age of Turbulence explores what the future holds, by talking to experts in the know. Compiling the insights of ten key figures in the financial services industry—regulators, commercial bankers, risk managers, and infrastructure specialists—who look at both strategic and operational issues in their assessments of how to clean up the industry and move towards a system of properly-managed risk, the book explores exactly what we need to do to prevent another crisis. Sharing their thoughts for the first time are Liu Mingkang, the Chairman of the China Banking Regulatory Commission; Eric Rosengren, President of the Federal Reserve Bank of Boston; Joel Werkama, Assistant Vice President of the Federal Reserve Bank of Boston; Jane Diplock, former chairperson of the International Organization of Securities Commissions and the former head of New Zealand’s securities commission; Jose Maria Roldan, head of the banking supervision at the Bank of Spain; Jesus Saurina, Director of the Financial Stability Department at the Bank of Spain; Dick Kovacevich, former chairman and CEO of Wells Fargo Bank; Mike Smith, CEO of ANZ Group and former head of HSBC’s Asia Pacific operations; Shan Weijian, Chairman and CEO of Pacific Alliance Group and former senior partner of TPG Capital; Rob Close, former CEO of CLS Group; Tham Ming Soong, Chief Risk Officer at the United Overseas Bank in Singapore; and Tsuyoshi Oyama, former head of the risk assessment division in the international affairs division of the Bank of Japan. Takes a unique look at the problems with the financial services industry and what can be done to fix them Brings together ideas for reform from numerous internationally respected figures working in the industry, many of them writing about their solutions for the first time Offers a remarkable insight into how to build a more sustainable future Eminently thought provoking, Banks at Risk presents real solutions to reforming the financial services industry, from the men and women who know it best.
Book Synopsis Does Deposit Insurance Increase Banking System Stability? by : Asl? Demirgüç-Kunt
Download or read book Does Deposit Insurance Increase Banking System Stability? written by Asl? Demirgüç-Kunt and published by World Bank Publications. This book was released on 1999 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Explicit deposit insurance tends to be detrimental to bank stability-- the more so where bank interest rates are deregulated and the institutional environment is weak"--Cover.
Book Synopsis Corporate Governance and Bank Performance by :
Download or read book Corporate Governance and Bank Performance written by and published by World Bank Publications. This book was released on 2005 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: "The authors jointly analyze the static, selection, and dynamic effects of domestic, foreign, and state ownership on bank performance. They argue that it is important to include indicators of all the relevant governance effects in the same model. "Nonrobustness" checks (which purposely exclude some indicators) support this argument. Using data from Argentina in the 1990s, their strongest and most robust results concern state ownership. State-owned banks have poor long-term performance (static effect), those undergoing privatization had particularly poor performance beforehand (selection effect), and these banks dramatically improved following privatization (dynamic effect. However, much of the measured improvement is likely due to placing nonperforming loans into residual entities, leaving "good" privatized banks."--World Bank web site.
Book Synopsis Managing the Sovereign-Bank Nexus by : Mr.Giovanni Dell'Ariccia
Download or read book Managing the Sovereign-Bank Nexus written by Mr.Giovanni Dell'Ariccia and published by International Monetary Fund. This book was released on 2018-09-07 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper reviews empirical and theoretical work on the links between banks and their governments (the bank-sovereign nexus). How significant is this nexus? What do we know about it? To what extent is it a source of concern? What is the role of policy intervention? The paper concludes with a review of recent policy proposals.
Book Synopsis Banking Risks Around the World by : Luc Laeven
Download or read book Banking Risks Around the World written by Luc Laeven and published by . This book was released on 2000 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: The degree of risk taking by a bank is related to the size of the gross subsidy that has been extended to the bank by the safety net. This subsidy can be calculated by applying a technique that models deposit insurance as a put option on the bank's assets.
