Officials must show that they understand why and how the public's confidence in the federal government's ability to manage financial turmoil was lost. Leaders of the Treasury, Federal Reserve, and the U.S. Securities and Exchange Commission must face up to their institutions' roles in an...

This paper traces the financial institution crisis of 2007-2008 to a breakdown in the incentives of regulators, supervisors, managers, and investors to perform adequate due diligence on securitized investments. Investors allowed their trust in the reputations of credit rating firms and the giant...

To be effective, programs of regulatory reform must address the incentive conflicts that intensify financial risk-taking and undermine government insolvency detection and crisis management. Subsidies to risk taking that large institutions extract from the financial safety net encourage managers...

This paper provides a comprehensive, global database of deposit insurance arrangements as of 2013. We extend our earlier dataset by including recent adopters of deposit insurance and information on the use of government guarantees on banks' assets and liabilities, including during the recent...

On June 4-5, 2014, SUERF and Baffi Finlawmetrics jointly organised a Colloquium/Conference “Money, Regulation and Growth: Financing New Growth in Europe” at Bocconi University, Milan. The present SUERF Study includes a selection of papers based on the authors’ contributions to the Milan...

This paper proposes a theoretically sound and easy-to-implement way to measure the systemic risk of financial institutions using publicly available accounting and stock market data. The measure models credit risk of banks as a put option on bank assets, a tradition that originated with Merton...

Explicit deposit insurance has been spreading rapidly in recent years, even to countries with low levels of financial and institutional development. This paper documents the extent of cross-country differences in deposit insurance design and reviews empirical evidence on how particular design...

Financial safety nets are incomplete social contracts that assign responsibility to various economic sectors for preventing, detecting, and paying for potentially crippling losses at financial institutions. This paper uses the theories of incomplete contracts and sequential bargaining to...

Unless priced and administered appropriately, a governmental safety net enhances risk-shifting opportunities for banks. This paper quantifies regulatory efforts to use capital requirements to control risk-shifting by U.S. banks during 1985 to 1994 and investigates how much risk-based capital...