MODERN MONETARY THEORY (MMT) notes correctly that money is a creature of the state, and that important macroeconomic and policy conclusions follow from this understanding, e.g., sovereign states are not revenue constrained and spending is primarily limited by inflation. Taxes give value to state...

Standard banking theory suggests that there exists an optimal level of credit risk that yields maximum bank profit. We identify the optimal level of risk-weighted assets that maximizes banks’ returns in the full sample of US banks over the period 1996–2011. We find that this optimal level is...

This paper discusses liquidity regulation when short-term funding enables credit growth but generates negative systemic risk externalities. It focuses on the relative merit of price versus quantity rules, showing how they target different incentives for risk creation. When banks differ in credit...

We study the effect of relationship lending on small firms failure probability using a uniquely rich data set comprised of information on individual loans of a large number of small firms in Colombia. We control for firm-specific variables and find that small firms involved in long-term liaisons...

This paper investigates the effects of home country banking regulations on the performance of foreign banks in Luxembourg’s financial center. We control for the main regulatory indicators, such as capital requirements, private monitoring, official disciplinary power and restrictions on...

This paper offers a broad introduction to the workings of the global financial system, the dynamics of the main financial markets, the nature and goals of the key financial institutions and the crucial role played by central banks and regulatory agencies. An important part of the paper focuses...

The financial crisis that affected the world market in late 2007 and determinate the failure of some prestigious banks and an unprecedented collapse of the stock market indices had multiple causes and lead to the transformation of the global financial market. To determine the causes that have...

Profitability represents one of the clue sources of the capital development, a relevant indicator of the competitive position for a banking institution and its management quality, that permit to a bank to maintain a certain profile of risk , offering protection towards the problems on short...

The strategy conceived for a certain type of business takes shape in the form of the business plan. The business plan represents a complex system based on interdependence and which reflects in an accessible manner the idea of business and the evolution of this one in the time. This is a work...

The goal of this paper is to discuss the issues of ethics, moral hazard and behavior in banking regulation of the global financial system. The paper is focused on the specific characteristics of ethical banks, compared with those of traditional ones, and provides a picture of the extent of this...