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Download or read book Risk Taking, Limited Liability and the Competition of Bank Regulators written by and published by . This book was released on 2001 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Hans-Werner Sinn
Publisher :
ISBN 13 :
Total Pages : 38 pages
Book Rating : 4.:/5 (129 download)
Download or read book Risk Taking, Limited Liability and the Competition of Bank Regulators written by Hans-Werner Sinn and published by . This book was released on 2010 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: Limited liability and asymmetric information between an investment bank and its lenders provide an incentive for a bank to undercapitalise and finance overly risky business projects. To counter this market failure, national governments have imposed solvency constraints on banks. However, these constraints may not survive in systems competition, as systems competition is likely to suffer from the same type of information asymmetry which induced the private market failure and which brought in the government in the first place (Selection Principle). As national solvency regulation creates a positive international policy externality on foreign lenders of domestic banks, there will be an undersupply of such regulation. This may explain why Asian banks were undercapitalised and took excessive risks before the banking crisis emerged.
Author : Hans-Werner Sinn
Publisher :
ISBN 13 :
Total Pages : 38 pages
Book Rating : 4.:/5 (91 download)
Download or read book Risk Taking, Limited Liability and the Competition of Bank Regulations written by Hans-Werner Sinn and published by . This book was released on 2001 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Hans-Werner Sinn
Publisher :
ISBN 13 :
Total Pages : 208 pages
Book Rating : 4.3/5 (97 download)
Download or read book Risk-taking, Limited Liability, and the Banking Crisis written by Hans-Werner Sinn and published by . This book was released on 2009 with total page 208 pages. Available in PDF, EPUB and Kindle. Book excerpt: "The volume includes theoretical articles on banks' liability restrictions, on the possible causes of the banking crisis and economic-policy recommendations on banking regulation by Hans-Werner Sinn in the past three decades."--Publisher's website.
Author : Xavier Vives
Publisher : Princeton University Press
ISBN 13 : 0691210039
Total Pages : 344 pages
Book Rating : 4.6/5 (912 download)
Download or read book Competition and Stability in Banking written by Xavier Vives and published by Princeton University Press. This book was released on 2020-11-03 with total page 344 pages. Available in PDF, EPUB and Kindle. Book excerpt: A distinguished economist examines competition, regulation, and stability in today's global banks Does too much competition in banking hurt society? What policies can best protect and stabilize banking without stifling it? Institutional responses to such questions have evolved over time, from interventionist regulatory control after the Great Depression to the liberalization policies that started in the United States in the 1970s. The global financial crisis of 2007–2009, which originated from an oversupply of credit, once again raised questions about excessive banking competition and what should be done about it. Competition and Stability in Banking addresses the critical relationships between competition, regulation, and stability, and the implications of coordinating banking regulations with competition policies. Xavier Vives argues that while competition is not responsible for fragility in banking, there are trade-offs between competition and stability. Well-designed regulations would alleviate these trade-offs but not eliminate them, and the specificity of competition in banking should be accounted for. Vives argues that regulation and competition policy should be coordinated, with tighter prudential requirements in more competitive situations, but he also shows that supervisory and competition authorities should stand separate from each other, each pursuing its own objective. Vives reviews the theory and empirics of banking competition, drawing on up-to-date analysis that incorporates the characteristics of modern market-based banking, and he looks at regulation, competition policies, and crisis interventions in Europe and the United States, as well as in emerging economies. Focusing on why banking competition policies are necessary, Competition and Stability in Banking examines regulation's impact on the industry's efficiency and effectiveness.
Author : Itai Agur
Publisher :
ISBN 13 :
Total Pages : 33 pages
Book Rating : 4.:/5 (53 download)
Download or read book Regulatory Competition and Bank Risk Taking written by Itai Agur and published by . This book was released on 2009 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Hans-Werner Sinn
Publisher :
ISBN 13 :
Total Pages : 56 pages
Book Rating : 4.3/5 ( download)
Download or read book Risk Taking, Limited Liability and the Competition of Bank Regulators written by Hans-Werner Sinn and published by . This book was released on 2001 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: Limited liability and asymmetric information between an investment bank and its lenders provide an incentive for a bank to undercapitalise and finance overly risky business projects. To counter this market failure, national governments have imposed solvency constraints on banks. However, these constraints may not survive in systems competition, as systems competition is likely to suffer from the same type of information asymmetry which induced the private market failure and which brought in the government in the first place (Selection Principle). As national solvency regulation creates a positive international policy externality on foreign lenders of domestic banks, there will be an undersupply of such regulation. This may explain why Asian banks were undercapitalised and took excessive risks before the banking crisis emerged.
Author : Benjamin Esty
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (129 download)
Download or read book Liability Rules and Risk Taking in Commercial Banks written by Benjamin Esty and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: From 1863-1933, commercial shareholders were subject to a broad range of liability rules for the obligation of their bank ranging from limited liability to unlimited liability. By increasing shareholder liability, the regulators hope to minimize incentives for risk shifting in these highly leveraged institutions. I find that risk taking is negatively related to the severity of the liability rule primarily because banks choose to hold less risky assets and greater net worth. These findings indicate that the shape of the equityholders' payoff function has a significant effect on their incentives particularly in regard to risk taking.
Author : Mr.Giovanni Dell'Ariccia
Publisher : International Monetary Fund
ISBN 13 : 1484381130
Total Pages : 41 pages
Book Rating : 4.4/5 (843 download)
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.
Author : Mr.Luc Laeven
Publisher : International Monetary Fund
ISBN 13 : 1484363728
Total Pages : 34 pages
Book Rating : 4.4/5 (843 download)
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.
Author : Sudipta Basu
Publisher :
ISBN 13 :
Total Pages : 63 pages
Book Rating : 4.:/5 (13 download)
Download or read book Bank Competition and Firms' Risk-Taking written by Sudipta Basu and published by . This book was released on 2019 with total page 63 pages. Available in PDF, EPUB and Kindle. Book excerpt: Research shows that bank competition affects general economic and banking-related outcomes, but much less is known about how it impacts firms' risk-taking. By exploiting staggered regulatory reforms across different U.S. states, we show that bank competition significantly reduces borrowers' risk-taking. In response to bank competition, firms invest in more capital-intensive but less risky projects: they increase capital expenditures and maintain stable R&D expenses, while reducing R&D risk. We also find that the decline in risk-taking is concentrated in operating accruals' volatility. Bank competition motivates lower borrowers' risk-taking through two mechanisms: (1) eroding borrowers' ability to commit to long-term relationship with banks, and (2) increasing the availability of cheaper credit. Further, risk reduction is more pronounced for firms that are more bank-dependent, smaller, less transparent, and receive cheaper loans after the regulatory reforms.
Author : Benjamin C. Esty
Publisher :
ISBN 13 :
Total Pages : 36 pages
Book Rating : 4.:/5 (356 download)
Download or read book Liability Rules and Risk Taking in Commercial Banks written by Benjamin C. Esty and published by . This book was released on 1996 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: From 1863-1933, commercial bank shareholders were subject to a broad range of liability rules ranging from limited liability to unlimited liability for creditor obligations. By increasing shareholder liability, the regulators hoped to reduce incentives for risk shifting in these highly leveraged institutions. Using a contingent claims model to generate predictions and data from 1911-15, I find that equity trades as if contingent liability were in effect and that portfolio allocation is a function of liability severity. These findings show that the shape of the equityholders payoff function has a significant impact on incentives particularly with regard to risk taking and, more generally, that contingent liability could be an effective complement to existing bank regulations.
Author : Ahmad Peivandi
Publisher :
ISBN 13 :
Total Pages : 55 pages
Book Rating : 4.:/5 (13 download)
Download or read book Aggregate Risk, Bank Competition and Regulation in General Equilibrium written by Ahmad Peivandi and published by . This book was released on 2017 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: We develop a general equilibrium model of competitive banks to examine the optimal design of bank regulation. There is a continuum of equilibria of the unregulated economy that feature varying relative sizes of the financial and real sectors. The unregulated economy underinvests (overinvests) in production when aggregate risk is below (above) a threshold. An efficient allocation is implemented by a range of regulatory policies comprising of capital and liquidity requirements, deposit insurance, and bailouts financed by taxes, but there is a unique regulated equilibrium for a given regulatory policy. Capital and liquidity requirements move in opposing directions; an optimal regulatory policy that features a stricter capital requirement has a looser liquidity requirement. When aggregate risk is low, the efficient allocation can be implemented via deposit insurance and taxation, but capital and liquidity requirements are necessary to ensure a unique regulated equilibrium. When aggregate risk is high, all four regulatory tools are essential components of an optimal regulatory policy. Capital and liquidity requirements that implement efficient regulatory policies do not vary with aggregate risk when it is below a threshold, but become tighter as aggregate risk increases above the threshold. Depositor subsidies via deposit insurance and tax shields are efficient when aggregate risk is low, but inefficient when it is high.
Author :
Publisher : Lulu.com
ISBN 13 : 9291316695
Total Pages : 294 pages
Book Rating : 4.2/5 (913 download)
Download or read book International Convergence of Capital Measurement and Capital Standards written by and published by Lulu.com. This book was released on 2004 with total page 294 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Hans-Werner Sinn
Publisher : Springer Science & Business Media
ISBN 13 : 3642615473
Total Pages : 378 pages
Book Rating : 4.6/5 (426 download)
Download or read book Economic Decisions Under Uncertainty written by Hans-Werner Sinn and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 378 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Fundamental Issues Involved Why do we need a theory of uncertainty? It is a fact that almost all man's economic decisions are made under conditions of uncertainty, but this fact alone does not provide a strong enough argument for making the effort necessary to generalize ordinary preference theory designed for a world of perfect certainty. In accordance with Occam's Razor, the mathematician may well welcome a generalization of assumptions even if it does not promise more than a restatement of known results. The economist, however, will only be well disposed towards making the effort if he can expect to achieve new insights and interesting results, for he is interested in the techniques necessary for the generalization only as means to an end, not as ends in themselves. A stronger reason for developing a theory of uncertainty, therefore, seems to be the fact that there are kinds of economic activities to which the non-stochastic preference theory has no access or has access only through highly artificial constructions. Such activities include portfolio decisions of wealth holders, speculation, and insurance. These will be considered in detail in the last chapter of the book. The main purpose of this book, however, is not to apply a theory of uncertainty to concrete economic problems, the purpose rather is to formulate such a theory.
Author : Lawrence D. Cluff
Publisher : DIANE Publishing
ISBN 13 : 0788186701
Total Pages : 187 pages
Book Rating : 4.7/5 (881 download)
Download or read book Risk-Based Capital written by Lawrence D. Cluff and published by DIANE Publishing. This book was released on 2000 with total page 187 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : John Kay
Publisher : PublicAffairs
ISBN 13 : 1610396049
Total Pages : 296 pages
Book Rating : 4.6/5 (13 download)
Download or read book Other People's Money written by John Kay and published by PublicAffairs. This book was released on 2015-09-22 with total page 296 pages. Available in PDF, EPUB and Kindle. Book excerpt: The finance sector of Western economies is too large and attracts too many of the smartest college graduates. Financialization over the past three decades has created a structure that lacks resilience and supports absurd volumes of trading. The finance sector devotes too little attention to the search for new investment opportunities and the stewardship of existing ones, and far too much to secondary-market dealing in existing assets. Regulation has contributed more to the problems than the solutions. Why? What is finance for? John Kay, with wide practical and academic experience in the world of finance, understands the operation of the financial sector better than most. He believes in good banks and effective asset managers, but good banks and effective asset managers are not what he sees. In a dazzling and revelatory tour of the financial world as it has emerged from the wreckage of the 2008 crisis, Kay does not flinch in his criticism: we do need some of the things that Citigroup and Goldman Sachs do, but we do not need Citigroup and Goldman to do them. And many of the things done by Citigroup and Goldman do not need to be done at all. The finance sector needs to be reminded of its primary purpose: to manage other people's money for the benefit of businesses and households. It is an aberration when the some of the finest mathematical and scientific minds are tasked with devising algorithms for the sole purpose of exploiting the weakness of other algorithms for computerized trading in securities. To travel further down that road leads to ruin. A Financial Times Book of the Year, 2015 An Economist Best Book of the Year, 2015 A Bloomberg Best Book of the Year, 2015
