This paper examines the results of a survey carried out in 2007 by the Bank of Italy concerning different characteristics of the organization of lending activities. Between 2003 and 2006 the physical distance between the headquarters and the branches increased, the limits to the decision-making...

It has become almost conventional wisdom that investors should avoid funds with high expense ratios. Like many nuggets of conventional wisdom, there is some truth, but many exceptions: some of the best funds come at the price of higher expense ratios. Financial planners need this type of...

The regulatory framework established during the Great Depression was dismantled in stages after 1969. The deregulation of deposits at banks and savings institutions created incentives to widen the scope of investments that banks and thrifts could make. Novel instruments were created that should...

Dodd-Frank Wall Street Reform regulations and other postcrisis regulations and guidelines have put enormous pressure on financial institutions to optimize the use of their scarce capital and to improve their return on equity (ROE) which has been significantly compressed compared to historical...

We present an overview of methods to estimate risk arising from operational losses. Our approach is based on the study of the statistical severity distribution of a single loss. We analyze the fundamental issues that arise in practice when modeling operational risk data. We address the...

A recurring criticism of U.S. bank supervisors is that their standards vary procyclicly with banking and economic conditions. The 2010 reforms of supervisory standards for bank capital adequacy and liquidity (Basel III) directly address procyclicality in supervision and its effects on credit...

This paper proposes a definition and assessment methodology for systemic financial risk that was inspired by systems accident research. Sociologist Charles Perrow found that industrial, aviation and marine systems are prone to failure if those systems are interactively complex and tightly...

In this study we survey practices and supervisory expectations for stress testing (ST) in a credit risk framework for banking book exposures. We introduce and motivate ST; and discuss the function, supervisory requirements and expectations, credit risk parameters, interpretation results with...

Has the political influence of the financial industry had any bearing on financial regulation and, ultimately, the recent financial crisis? This paper discusses the findings of recent research that uses a detailed database of the lobbying activities, campaign contributions, political connections...

One of the main topics in operational risk is the estimation of loss severity distribution. Numerous parametric estimations have been suggested, although very few work for both high frequency small losses and low-frequency big losses. In this paper the most used parametric models, kernel...