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Risk Management in Financial Institutions

Rampini, Adriano A. - 2019

We study risk management in financial institutions using data on hedging of interest rate and foreign exchange risk. We find strong evidence that institutions with higher net worth hedge more, controlling for risk exposures, both across institutions and within institutions over time. For...

Persistent link: https://www.econbiz.de/10012479649

The Risks of Financial Institutions

Carey, Mark - 2005

Over the last twenty years, the consensus view of systemic risk in the financial system that emerged in response to the banking crises of the 1930s and before has lost much of its relevance. This view held that the main systemic problem is runs on solvent banks leading to bank panics. But...

Persistent link: https://www.econbiz.de/10012467237

Climate Stress Testing

Acharya, Viral V.; Berner, Richard B.; Engle, Robert F.; … - National Bureau of Economic Research - 2023

We explore the design of climate stress tests to assess and manage macro-prudential risks from climate change in the financial sector. We review the climate stress scenarios currently employed by regulators, highlighting the need to (i) consider many transition risks as dynamic policy choices;...

Persistent link: https://www.econbiz.de/10014250115

Governance, Risk Management, and Risk-Taking in Banks

Stulz, René M. - 2014

This paper examines how governance and risk management affect risk-taking in banks. It distinguishes between good risks, which are risks that have an ex ante private reward for the bank on a stand-alone basis, and bad risks, which do not have such a reward. A well-governed bank takes the amount...

Persistent link: https://www.econbiz.de/10011955539

Interest Rate Risk and Capital Adequacy For Traditional Banks and Financial Intermediaries

McCulloch, J. Huston - 1978

Traditionally, banks and financial intermediaries borrow short and lend long. This causes a risk of negative net worth (and failure, under simplifying assumptions), because the present discounted value of the assets is more volatile than that of the liabilities. This paper utilizes a new option...

Persistent link: https://www.econbiz.de/10012478901

Risk Taking, Limited Liability and the Competition of Bank Regulators

Sinn, Hans-Werner - 2001

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...

Persistent link: https://www.econbiz.de/10012470046

Do Strict Capital Requirements Raise the Cost of Capital? Banking Regulation and the Low Risk Anomaly

Baker, Malcolm - 2013

Minimum capital requirements are a central tool of banking regulation. Setting them balances a number of factors, including any effects on the cost of capital and in turn the rates available to borrowers. Standard theory predicts that, in perfect and efficient capital markets, reducing banks'...

Persistent link: https://www.econbiz.de/10012459645

Bank Governance, Regulation, and Risk Taking

Laeven, Luc - 2008

This paper conducts the first empirical assessment of theories concerning relationships among risk taking by banks, their ownership structures, and national bank regulations. We focus on conflicts between bank managers and owners over risk, and show that bank risk taking varies positively with...

Persistent link: https://www.econbiz.de/10012464532

A Note on Liquidity Risk Management

Brunnermeier, Markus K. - 2009

When a firm is unable to roll over its debt, it may have to seek more expensive sources of financing or even liquidate its assets. This paper provides a normative analysis of minimizing such rollover risk, through the optimal dynamic choice of the maturity structure of debt. The objective of a...

Persistent link: https://www.econbiz.de/10012463920

Basel II : A Contracting Perspective

Kane, Edward J. - 2006

incomplete contracts and sequential bargaining to interpret the Basel Accords as a framework for endlessly renegotiating minimal … sectoral effects that the 2004 Basel II agreement might produce. The analysis seeks to explain why, in the U.S., attempting to … resolve these inconsistencies has spawned an embarrassingly fractious debate and repeatedly pushed back Basel II's scheduled …

Persistent link: https://www.econbiz.de/10012465955

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