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Are bank shareholders enemies of regulators or a potential source of market discipline?

Park, Sangkyun; Peristiani, Stavros - 2001

In moral hazard models, bank shareholders have incentives to transfer wealth from the deposit insurer - that is, maximize put option value - by pursuing riskier strategies. For safe banks with large charter value, however, the risk-taking incentive is outweighed by the possibility of losing...

Persistent link: https://www.econbiz.de/10010283427

Macroprudential supervision of financial institutions: Lessons from the SCAP

Hirtle, Beverly; Schuermann, Til; Stiroh, Kevin - 2009

A fundamental conclusion drawn from the recent financial crisis is that the supervision and regulation of financial firms in isolation - a purely microprudential perspective - are not sufficient to maintain financial stability. Rather, a macroprudential perspective, which evaluates and responds...

Persistent link: https://www.econbiz.de/10010283502

Robust capital regulation

Acharya, Viral; Mehran, Hamid; Schuermann, Til; Thakor, … - 2011

Banks' leverage choices represent a delicate balancing act. Credit discipline argues for more leverage, while balance-sheet opacity and ease of asset substitution argue for less. Meanwhile, regulatory safety nets promote ex post financial stability, but also create perverse incentives for banks...

Persistent link: https://www.econbiz.de/10010287178

The economics of bank supervision

Eisenbach, Thomas M.; Lucca, David O.; Townsend, Robert M. - 2016

We study bank supervision by combining a theoretical model that distinguishes supervision from regulation and a novel dataset on work hours of Federal Reserve supervisors. We highlight the trade-offs between the benefits and costs of supervision and use the model to interpret the relationship...

Persistent link: https://www.econbiz.de/10011537999

International banking and liquidity risk transmission: Lessons from across countries

Buch, Claudia M.; Goldberg, Linda S. - 2014

financial crisis. Yet we know little about the actual magnitudes and mechanisms for transmission of liquidity shocks through … studies conducted in eleven countries to explore liquidity risk transmission. Among the main results is, first, that … explanatory power of the empirical model is higher for domestic lending than for international lending. Second, how liquidity risk …

Persistent link: https://www.econbiz.de/10011340974

Liquidity risk and U.S. bank lending at home and abroad

Correa, Ricardo; Goldberg, Linda; Rice, Tara - 2014

While the balance sheet structure of U.S. banks influences how they respond to liquidity risks, the mechanisms for the …-sectional differences in response to liquidity risk depend on the banks' shares of core deposit funding. By contrast, differences across … global banks (those with foreign affiliates) are associated with ex ante liquidity management strategies as reflected in …

Persistent link: https://www.econbiz.de/10011340983

Liquidity, volatility, and flights to safety in the US treasury market: Evidence from a new class of dynamic order book models

Engle, Robert; Fleming, Michael; Ghysels, Eric; Nguyen, … - 2012

We propose a new class of dynamic order book models that allow us to 1) study episodes of extreme low liquidity and 2 …) unite liquidity and volatility in one framework through which their joint dynamics can be examined. Liquidity and volatility …

Persistent link: https://www.econbiz.de/10010333574

Banking globalization, transmission, and monetary policy autonomy

Goldberg, Linda S. - 2013

International financial linkages, particularly through global bank flows, generate important questions about the consequences for economic and financial stability, including the ability of countries to conduct autonomous monetary policy. I address the monetary autonomy issue in the context of...

Persistent link: https://www.econbiz.de/10010333575

ECB monetary operations and the interbank repo market

Dunne, Peter G.; Fleming, Michael J.; Zholos, Andrey - 2013

We examine the relationship between monetary policy operations and interbank borrowing and lending of funds using sovereign bonds as collateral. We first establish that, in the precrisis period, there are important but rather weak relations between these funding sources and that this...

Persistent link: https://www.econbiz.de/10010333597

Order flow segmentation and the role of dark trading in the price discovery of U.S. treasury securities

Fleming, Michael; Nguyen, Giang - 2013

a mechanism for discovering dark liquidity. We quantify its role in the price formation process in a model of the … dynamics of price and segmented order flow induced by the protocol. We find that the dark liquidity pool generally contains … liquidity providers to guard against adverse price movements than as a channel to hide private information. …

Persistent link: https://www.econbiz.de/10010333609