A remarkable fact about post-crisis attempts to end the “too-big-to-fail” status of systemically important financial institutions (SIFIs) is how much these efforts depend on the creation of new classes of “loss-absorbing” creditors. If there is one thing SIFIs have never lacked, it is an...

The history of banking crises grows richer with each passing decade, indeed with each passing year. Theories abound: the inherent instability of fractional reserve systems, systemic shocks that overwhelm risk management defenses, myopic optimism, a failure to regulate enough, too much regulation...

We present a stochastic simulation forecasting model for stress testing aimed at assessing banks' capital adequacy, financial fragility and probability of default. The paper provides a theoretical presentation of the methodology and the essential features of the forecasting model on which it is...

Prior studies generally question the credibility and usefulness of the disclosed outcomes of government stress tests of banks in the European Union during the recent global financial crisis. In contrast, I document robust evidence that the geographic distribution of sovereign- and credit-risk...

Following the 2007-09 Global Financial Crisis many countries have changed their financial supervisory architecture by increasing the involvement of central banks in supervision. This has led many scholars to argue that financial crises are an important driver in explaining the evolution of the...

We investigate the role of bank regulatory reports in the information environments of banks. We find that: (1) Call Reports, but not FR Y-9Cs, elicit economically significant stock price and volume reactions when they are publicly released despite the fact that Call Reports usually follow...

Regulation is often funded with fees paid by regulated firms, potentially creating incentive problems. We use this feature to study the incentives of regulators and their ability to affect firm behavior. Theoretically, we show that firms that pay higher fees may face more lenient regulation,...

Inadequate regulation of the financial system is widely thought to have contributed to the financial crisis. The purpose of the book is to articulate a framework within which financial regulation can be analysed in a coherent and comprehensive fashion. The book's approach is distinctive in...

The rest of this paper is set up as follows. In section 2 we provide a brief description of the ECB's comprehensive assessment of the European banking system. In section 3 we describe the data we are using and provide some descriptive statistics, particularly regarding the changes between the...

We analyze the effect of a U.S. subprime mortgage regulation on the availability of mortgagecredit. Due to all subprime mortgage originators being affected by the regulation studied,there is no natural control group. We use a pro t maximization assumption to construct acontrol group. We nd no...