This editorial examines global efforts to regulate the shadow banking system, in particular the green paper released by the European Commission in March 2012. It suggests that the financial market landscape in Europe is currently in flux and large swings in market activity — either through...

This paper investigates a model of endogenous product differentiation in subprime lending markets. In the subprime literature the discussion surrounds two competing hypotheses about pricing behavior. The opportunity pricing hypothesis suggests that lenders are rent seeking in their pricing...

Given the fragmented structure of the U.S. government, business is able to capitalize on its structural power only when it is united. This paper illustrates this dynamic through an analysis of the processes leading to the enactment of the Financial Modernization Act (FMA) of 1999, which repealed...

Conceptually, the ‘resolution' of financial intermediaries does not merely refer to instruments and procedures for the management of insolvencies in the financial sector generally. Rather, ‘resolution' is conceived as a functional alternative to, and substitute for, traditional means of...

This study examines the impact of the Basel III regulatory framework on the efficiency of Islamic and conventional banks using conditional quantile regressions. We find that Islamic banks are significantly more efficient than conventional banks. We also find that, relative to conventional banks,...

This paper provides an overview of regulatory forbearance and its jurisdictional application in the banking system during the COVID-19 Pandemic. Over the years, regulatory forbearance has been used in the banking system and in recent times, it was prominently brought to the fore during the...

This study examines the impact of strengthening bank capital supervision on bank behavior in the incomplete and complete enforcement of regulations. In a dynamic model of banks facing idiosyncratic shocks, banks accumulate regulatory capital and decrease charter value and lending in the short...

The Banking Union increased bank capital requirements and tightened crisis response policy instruments, favoring bank resolutions or liquidations, while hindering bank bailouts. The ECB has gained new powers as the Eurozone's main supervisory authority and as the leading 'resolution or...

Shadow banking is the creation or transfer – by banks and non-bank intermediaries – of bank-like risks outside the banking system. In Italy the shadow banking system is fully regulated, mostly following the principle of same business-same rules or ‘bank-equivalent regulation'. After an...

The notion that some banks are “too big to fail” builds on the premise that governments will offer support to avoid the adverse consequences of their disorderly failures. However, this promise of support comes at a cost: Large, complex, or interconnected banks might take on more risk if they...