Networks and market-based measures of systemic risk: the European banking system in the aftermath of the financial crisis

Banking regulation plays an important role in the process of ensuring financial stability, the national economy, equitable distribution of wealth and the most efficient use of financial resources. As a key regulatory tool, Banking Regulation monitors and monitors financial transactions to improve their profitability and efficiency. The author points out that the main areas of banking regulation and supervision are to control the processes of formation, operation and liquidation of commercial banks. The article focuses on the fact that the 2008 financial crisis has become a motivating driver for reforms in the banking system of Europe and America. The main purpose of the article is to assess the impact of changes in the European Banking System, in particular in the context of the study of the features of the Financial Markets Directive, on the functioning of the global economy. This paper provides a critical review of the literature from the point of view of analyzing the specificity of MiFID II in the context of its impact on the economic aspects of the country’s development. The implementation of the Directive requires significant financial investment, but these costs will pay off given the fact that MiFID II is well-designed and aimed at providing more secure protection and greater customer base stability. However, the author points out the underdevelopment and inconsistency of the regulatory framework, which is of greater concern than the cost of implementing MiFID II. Thus, the idea of the likelihood of financial and economic problems in the process of influence of banking regulation on the development of the global economy is substantiated. Notwithstanding these shortcomings, the regulatory framework for the formulation and implementation of the Directive is a significant contribution to the regulation of the financial sector. The results of the study represent scientific and practical value for academics, politicians, banking financial management of economic entities, stakeholders to better prepare and evaluate future changes as a result of reforming banking regulation. Keywords: Directives, Economic growth, Financial crisis, MiFID, Regulation.

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The Misdiagnosed Debt Crisis

Current History ◽

10.1525/curh.2012.111.743.83 ◽

2012 ◽

Vol 111 (743) ◽

pp. 83-87

Author(s):

Daniel Gros

Keyword(s):

Financial Crisis ◽

Public Debt ◽

Debt Crisis ◽

Banking System ◽

European Banking

A few nations' public debt problems have become a systemic, area-wide financial crisis because of the fragility of the European banking system.

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From One Stress Test to Another: Lessons for Healthcare Reform from the Financial Sector

European Journal of Risk Regulation ◽

10.1017/err.2020.90 ◽

2020 ◽

Vol 11 (4) ◽

pp. 800-807

Author(s):

Shirley KEMPENEER

Keyword(s):

Financial Crisis ◽

Risk Sharing ◽

Financial Regulation ◽

Stress Test ◽

Banking System ◽

Healthcare Regulation ◽

European Healthcare ◽

European Banking ◽

European Health ◽

Europe Today

The financial crisis in 2008 and the COVID-19 pandemic today have made it clear that both financial and medical crises spread pervasively across borders. The financial crisis proved that the health of the entire European banking system stands and falls with the health of a single systemically important bank. As such, in the past decade, European Union (EU)-wide cooperation and regulation have been strengthened to ensure financial health across Europe. Today, the COVID-19 crisis reveals the de facto existence of a European healthcare system, where Member States’ medical health is interlinked and challenged. It too highlights the need for a more coordinated approach. This paper will draw lessons from European financial regulation and stress testing to make recommendations for EU-wide healthcare. The paper will show the latent benefits that a stress test might have on healthcare performance through mechanisms of governmentality. Moreover, it will pinpoint shortcomings in the financial stress test that could pose looming dangers for a European Health Union, such as a lack of de facto risk sharing. The paper concludes with pragmatic suggestions for a way forward in European healthcare regulation.

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Comparing Different Systemic Risk Measures for European Banking System

International Business Research ◽

10.5539/ibr.v12n1p35 ◽

2018 ◽

Vol 12 (1) ◽

pp. 35 ◽

Cited By ~ 1

Author(s):

Annalisa Di Clemente

Keyword(s):

Systemic Risk ◽

Value At Risk ◽

Financial Stability ◽

Risk Measures ◽

Banking System ◽

Expected Shortfall ◽

Conditional Value At Risk ◽

Dependence Structure ◽

European Banking ◽

European Banks

This research examines and compares the performances in terms of systemic risk ranking for three different systemic risk metrics based on daily frequency publicly available data, specifically: Marginal Expected Shortfall (ES), Component Expected Shortfall (CES) and Delta Conditional Value-at-Risk (ΔCoVaR). We compute ΔCoVaR, MES and CES by utilizing EVT principles for modelling marginal distributions and Student’s t copula for describing the dependence structure between every bank and the banking system. Our objective is to attest whether different systemic risk metrics detect the same banks as systemically dangerous institutions with refer to a sample of European banks over the time span 2004-2015. For each bank in the sample we also calculate three traditional market risk measures, like Market VaR, Sharpe’s beta and the correlation between every bank and the banking system (European STOXX 600 Banks Index). Another aim is to explore the existence of a link among systemic risk measures and traditional risk metrics. In addition, the classification results obtained by the different risk metrics are compared with the ranking in terms of systemic riskiness (for European banks) calculated by Financial Stability Board (2015) using end-2014 data and collected in its list of Global Systemically Important Banks (G-SIBs). With refer to the entire sample period, we find a good coherence of ranking results among the three different systemic risk metrics, in particular between CES and ΔCoVaR. Moreover, we find for MES and ΔCoVaR a strong linkage with beta and correlation metrics respectively. Finally, CES metric shows the highest level of concordance with the list of G-SIBs by FSB with refer to European banks.

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Alcune considerazioni sullo Shadow Banking System

STUDI ECONOMICI ◽

10.3280/ste2011-104004 ◽

2012 ◽

pp. 69-87

Author(s):

Figuera Stefano

Keyword(s):

Financial Crisis ◽

Systemic Risk ◽

Financial Intermediation ◽

Banking System ◽

Shadow Banking ◽

Production Theory ◽

Recent Period ◽

Capitalist Economy ◽

Efficient Control ◽

Shadow Banking System

The financial intermediation system has been characterized by the emergence of new subjects and instruments modifying its organization. The development of the shadow banking system parallel to the traditional one has led to the demand, during the recent period of financial crisis, for a more efficient control to weather the growing systemic risk. This changing context leads the Author to consider some essential profiles of the monetary nature of the capitalist economy. Specifically, a need is perceived to reinterpret recent events in the light of the credit nature of money and the endogenous character of its supply, aspects on which scholars of the Keynesian school have long focused their attention. The Author considers particularly useful the indications deriving from the monetary production theory, especially with reference to the distinction among the various forms of financing, to understand such changes and adopt suitable strategies to handle them.

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Community Structure and Systemic Risk of Bank Correlation Networks Based on the U.S. Financial Crisis in 2008

Algorithms ◽

10.3390/a14060162 ◽

2021 ◽

Vol 14 (6) ◽

pp. 162

Author(s):

Yajing Huang ◽

Feng Chen

Keyword(s):

Community Structure ◽

Financial Crisis ◽

Systemic Risk ◽

Balance Sheet ◽

Banking System ◽

Financial System ◽

Point Of View ◽

Correlation Network ◽

Power Law Distribution ◽

Correlation Networks

This paper studies the community structure of the bank correlation network in the financial system and analyzes the systemic risk of the community sub-networks. Based on the balance sheet data of U.S. commercial banks from 2008, we establish a bank correlation network for each state according to the banks’ investment portfolio ratio. First, we analyze the community structure of each bank’s correlation network and verify the effectiveness of the community division from the point of view of the importance of nodes. Then, combining the data of failed banks after the 2008 financial crisis, we find that for small communities, the financial systemic risk will appear to have obvious volatility, and it is quite likely to reach an extremely high level. With the increase in the number of nodes in the community, systemic risk will tend towards a stable and low level. Furthermore, if only communities with failed banks are considered, the regression analysis shows that systemic risk and the size of the community almost follow a power law distribution trend. These results reveal the importance of supervising the banking system at the level of community sub-networks, which has certain guiding significance for the stability of the financial system.

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