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analysis is relevant to the debate on bank capital regulation, and complements Admati et al. (2010). In that paper we argued … for assessing regulation. Other arguments made to support claims that "equity is expensive" are flawed. Like reduction in … subsidies, the effects of leverage reduction on bank managers or shareholders do not represent a social cost. In fact, we show …
Persistent link: https://www.econbiz.de/10009528814
Capital regulation is critical to address distortions and externalities from intense conflicts of interest in banking … and from the failure of markets to counter incentives for recklessness. The approaches to capital regulation in Basel III …
Persistent link: https://www.econbiz.de/10011493332
lacking empirical support.We conclude that bank equity is not socially expensive, and that high leverage at the levels allowed … remaining challenges are addressed, capital regulation can be a powerful tool for enhancing the role of banks in the economy …
Persistent link: https://www.econbiz.de/10010205922
Regulation of risks in banking is driven by evolution of financial intermediation and markets, and vice versa. The … banking regulation in the world, precise requirements and scope were reformed and implemented in response to crises and global … the paradigm from partial improvements under financial liberalization regime to a world-wide regulation tightening on the …
Persistent link: https://www.econbiz.de/10012591641
failed to influence—federal securities regulation and state corporate law, and the prospective roles for the EMH in these … contexts. In federal securities regulation, the EMH has offered a theoretical construct to accompany the general belief in the …
Persistent link: https://www.econbiz.de/10010603964
bank's financing structure. In our model the bank's assets consist of illiquid loans and liquid reserves and are financed … to an exogenous rollover risk. We show that the use of repos inflicts two types of indirect (“shadow”) costs on the bank …'s shareholders: first, it induces the bank to maintain higher liquid reserves in order to alleviate the additional default risk …
Persistent link: https://www.econbiz.de/10011293473
regulatory requirements. Our analytic characterization of the bank policy choices shows that imposing solely liquidity … requirements leads to lower bank losses in default at the cost of an increased likelihood of default. Combining liquidity … requirements with leverage requirements reduces drastically both the likelihood of default and the magnitude of bank losses in …
Persistent link: https://www.econbiz.de/10011293576
This paper examines whether regulation that is more conducive to competitive and efficient financial systems has a … external sources of funding tend to grow faster in countries that have more competition-friendly regulation in markets for … banking services and financial instruments. The regulatory indicators are assembled from surveys conducted by the World Bank …
Persistent link: https://www.econbiz.de/10012444857
Financial innovation and integration have spurred financial development and enhanced consumer choice. Financial integration has also been associated with the emergence of large, complex, cross-border financial institutions (LCFIs). This has changed risk profiles and made cross-border contagion...
Persistent link: https://www.econbiz.de/10012446256
We propose a spatial competition model to study banks’ strategic responses to the asymmetric Spanish geographic deregulation process. We find that once the geographic deregulation process finishes, inter-regional mergers between savings banks are optimal whenever the economies of scale...
Persistent link: https://www.econbiz.de/10009355559