The turmoil in the financial markets that had its roots in the 2007 US subprime crisis prompted government action all over the world motivated by contagion concerns, leaving a heavy bill for the tax payers to pick up. We find that a contributory regime based on contagion risk exposure changes...

This paper constructs an index of regulatory quality for improving financial inclusion for the purpose of assessing and comparing the quality of rules and regulations in a sample of eight Latin American countries. The index comprises 11 regulatory practices classified into three categories:...

This paper constructs and index of regulatory quality for improving financial inclusion for the purpose of assessing and comparing the quality of rules and regulations in a sample of eight Latin American countries. The index comprises 11 regulatory practices classified into three categories:...

To address the challenges posed by global systemically important banks (G-SIBs), the Basel Committee on Banking Supervision recommended an "additional loss absorbency requirement" for these institutions. Along these lines, I develop a microfounded design of capital surcharges that target the...

Asset-backed securities (ABSs) and covered bonds (CBs) are structured finance instruments that require a range of key services, which may be provided by many firms. However, despite the prevalence of structured finance instruments in Europe, the network between issuers and service providers has...

This paper investigates a model of default in financial networks where the decision by one agent on whether or not to default impacts the incentives of other agents to escape default. Agents' payoffs are determined by the clearing mechanism introduced in the seminal contribution of Eisenberg and...

The traditional approach to bank regulation, and notably to capital requirements, is based on microprudential cost-benefit analyses. The emphasis is, therefore, on rules that aim at ensuring that each and every banking firm is safe and sound. This note examines possible extensions of the...

The failure of large, complex and interconnected banks has severe consequences to the real economy. To address the challenges posed by globally systemically important banks (G-SIBs), the Basel Committee on Banking Supervision recommended an “additional loss absorbency requirement” for these...

This paper builds a model of a regulation game, in which the active regulator moves first and designs the regulation requirement with the consideration of the network formed by banks and the associated systemic risk. Banks form the network strategically and diversify their portfolios within the...

By analysing the macro financial determinants of the Great Financial Crisis of 2007-2009 on 83 countries, we find that the probability of suffering the crisis in 2008 was larger for countries having higher levels of credit deposit ratio whereas it was lower for countries having higher levels of:...