3. Securitized banking

2016 ◽  
pp. 43-53
Author(s):  
John Goddard ◽  
John O. S. Wilson
Keyword(s):  
Financial Crisis ◽  
Business Model ◽  
Global Financial Crisis ◽  
Short Term ◽  
Commercial Paper ◽  
Set Up ◽  
The Global Financial Crisis

Preceding the global financial crisis of 2007–09, an alternative business model of banking evolved. An important element in the development of the securitized banking model was a growing tendency for banks to rely less heavily on deposits as a source of short-term finance, and more heavily on other sources such as the repo market, commercial paper, and derivatives. ‘Securitized banking’ explains that having raised short-term funding through these means, the bank can deploy the funds to support loans to borrowers such as house purchasers. Often a bank will bundle a large number of loans together and sell the package to a Structured Investment Vehicle set up by the bank to administer the loans.

scholarly journals Would Macroprudential Regulation Have Prevented the Last Crisis?

2019 ◽  
Vol 33 (1) ◽  
pp. 107-130 ◽  
Author(s):  
David Aikman ◽  
Jonathan Bridges ◽  
Anil Kashyap ◽  
Caspar Siegert
Keyword(s):  
Financial Crisis ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Financial System ◽  
Mortgage Lending ◽  
Financial Policy ◽  
Policy Interventions ◽  
The Us ◽  
Set Up ◽  
The Global Financial Crisis

How well equipped are today’s macroprudential regimes to deal with a rerun of the factors that led to the global financial crisis? To address the factors that made the last crisis so severe, a macroprudential regulator would need to implement policies to tackle vulnerabilities from financial system leverage, fragile funding structures, and the build-up in household indebtedness. We specify and calibrate a package of policy interventions to address these vulnerabilities—policies that include implementing the countercyclical capital buffer, requiring that banks extend the maturity of their funding, and restricting mortgage lending at high loan-to-income multiples. We then assess how well placed are two prominent macroprudential regulators, set up since the crisis, to implement such a package. The US Financial Stability Oversight Council has not been designed to implement such measures and would therefore make little difference were we to experience a rerun of the factors that preceded the last crisis. A macroprudential regulator modeled on the UK’s Financial Policy Committee stands a better chance because it has many of the necessary powers. But it too would face challenges associated with spotting build-ups in risk with sufficient prescience, acting sufficiently aggressively, and maintaining political backing for its actions.

Labour Markets in the Global Financial Crisis: The Good, the Bad and the Ugly

2014 ◽  
Vol 228 ◽  
pp. R58-R64 ◽  
Author(s):  
Mary C. Daly ◽  
John G. Fernald ◽  
Òscar Jordà ◽  
Fernanda Nechio
Keyword(s):  
Financial Crisis ◽  
Labour Market ◽  
Global Financial Crisis ◽  
Technological Changes ◽  
Okun’S Law ◽  
Short Term ◽  
Demand Shock ◽  
Okun's Law ◽  
Global Demand ◽  
The Global Financial Crisis

This note examines labour market performance across countries through the lens of Okun's Law. We find that after the 1970s but prior to the global financial crisis of the 2000s, the Okun's Law relationship between output and unemployment became more homogenous across countries. These changes presumably reflected institutional and technological changes. But, at least in the short term, the global financial crisis undid much of this convergence, in part because the affected countries adopted different labour market policies in response to the global demand shock.

scholarly journals Financial phantasmagoria: corporate image-work in times of crisis

Organization ◽  
2011 ◽  
Vol 18 (2) ◽  
pp. 153-172 ◽  
Author(s):  
Christian De Cock ◽  
Max Baker ◽  
Christina Volkmann
Keyword(s):  
Financial Crisis ◽  
Financial Institutions ◽  
Global Financial Crisis ◽  
Financial Institution ◽  
Corporate Image ◽  
Limited Capacity ◽  
Determining Set ◽  
Words And Images ◽  
Set Up ◽  
The Global Financial Crisis

Our purpose in this article is to relate the real movements in the economy during 2008 to the ‘image-work’ of financial institutions. Over the period January—December 2008 we collected 241 separate advertisements from 61 financial institutions published in the Financial Times. Reading across the ensemble of advertisements for themes and evocative images provides an impression of the financial imaginaries created by these organizations as the global financial crisis unfolded. In using the term ‘phantasmagoria’ we move beyond its colloquial sense of a set of strange images designed to dazzle towards the more technical connotation used by Rancière (2004) who suggested that words and images can offer a trace of an overall determining set-up if they are torn from their obviousness so they become phantasmagoric figures. The key phantasmagoric figure we identify here is that of the financial institution as timeless, immortal and unchanging; a coherent and autonomous entity amongst other actors. This notion of uniqueness belies the commonality of thinking which precipitated the global financial crisis as well as the limited capacity for control of financial institutions in relation to market events. It also functions as a powerful naturalizing force, making it hard to question certain aspects of the recent period of ‘capitalism in crisis’.

UK Responses and the First Phase

2019 ◽  
pp. 112-135
Author(s):  
Huw Macartney
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Early Stage ◽  
Public Confidence ◽  
Opinion Poll ◽  
Set Up ◽  
The Global Financial Crisis ◽  
The Uk ◽  
Legitimacy Crisis ◽  
Poll Data

This chapter covers the early 2000s in the UK as a backdrop to the legitimacy crisis that unfolded as the global financial crisis hit. It explains the institutional set-up and the regulatory mindset that prevailed during the 2000s. This helps to explain what changed as financial crisis hit. Using opinion poll data the chapter then explores the fall in public confidence in both banks and state managers as a means of tracking the legitimacy crisis. Then the chapter explores the austerity agenda and rising protests in the UK, before explaining the nascent populist response by UK state managers at the early stage of the financial crisis.

Corporate Change After the Global Financial Crisis

2020 ◽  
Vol 53 (2) ◽  
pp. 245-271
Author(s):  
Ivo Arnold
Keyword(s):  
Financial Crisis ◽  
Interest Rates ◽  
Business Model ◽  
Global Financial Crisis ◽  
Jel Classification ◽  
Long Run ◽  
Corporate Change ◽  
History Of ◽  
Using Data ◽  
The Global Financial Crisis

Abstract This paper examines the strategic response of the Dutch bank ING to the global financial crisis. Prior to the crisis, ING was a prominent global exponent of direct banking, using the so-called pure play internet (PPI) business model. PPI banking is a hybrid business model that combines features of relationship and transaction banking. Downsides of this business model are that it may lead to overexposure in securities and that it may attract savers that have an above-average sensitivity to interest rates or risk. Using data on the geographical activities of ING, the timeline of relevant events in the history of ING and strategy statements of ING management, we examine how ING has responded to the strategic challenges of the crisis. We conclude that PPI banking should be viewed more as a market penetration strategy than as a full-blown business model that is tenable in the long run. JEL Classification: G01, G21

scholarly journals The post-crisis strategies of exchange banks in Poland in the context of their operating effectiveness

2014 ◽  
Vol 15 (1) ◽  
pp. 7-23
Author(s):  
Bogdan Włodarczyk
Keyword(s):  
Financial Crisis ◽  
Management Strategy ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Public Trust ◽  
Financial Service ◽  
Short Term ◽  
Service Market ◽  
Operating Strategies ◽  
The Global Financial Crisis

Abstract The global financial crisis changed the customers’ approach to the banking sector. Nowadays, banks are often perceived not as public trust institutions, but enterprises operating with a huge risk on a highly competitive market and set on a short-term profit. Such an approach and the financial results of the global financial crisis influence the banking sector in a direct and indirect way. As a result, banks in the post-crisis period had to adopt such operating strategies, which allowed them to rebuild the trust and successfully and effectively function on the financial service market. The aim of the article is the analysis of the management strategy adopted by banks and the evaluation of their effectiveness in the postcrisis period. The author presents a thesis that the change in the strategies of managing a bank after the crisis in 2008 resulted in limiting the risk and increasing the effectiveness of bank operating. In order to verify the thesis, the available materials on the strategies adopted by the exchange banks were compared and their effectiveness in the years 2009-2012 was analyzed.

scholarly journals Post-Crisis Changes in Global Bank Business Models

2019 ◽  
Vol 19 (295) ◽  
Author(s):  
John Caparusso ◽  
Yingyuan Chen ◽  
Peter Dattels ◽  
Rohit Goel ◽  
Paul Hiebert
Keyword(s):  
Financial Crisis ◽  
Business Model ◽  
Capital Flows ◽  
Business Models ◽  
Global Financial Crisis ◽  
Four Dimensions ◽  
International Banks ◽  
Bank Business Models ◽  
The Global Financial Crisis ◽  
Systemically Important Banks

The Global Financial Crisis unleashed changes in the operating and regulatory environments for large international banks. This paper proposes a novel taxonomy to identify and track business model evolution for the 30 Global Systemically Important Banks (G-SIBs). Drawing from banks’ reporting, it identifies strategies along four dimensions –consolidated lines of business and geographic orientation, and the funding models and legal entity structures of international operations. G-SIBs have adjusted their business models, especially by reducing market intensity. While G-SIBs have maintained international orientation, pressures on funding models and entity structures could affect the efficiency of capital flows through the bank channel.

scholarly journals Reflections on Northern Rock: The Bank Run that Heralded the Global Financial Crisis

2009 ◽  
Vol 23 (1) ◽  
pp. 101-119 ◽  
Author(s):  
Hyun Song Shin
Keyword(s):  
Financial Crisis ◽  
Financial Regulation ◽  
Global Financial Crisis ◽  
Capital Requirements ◽  
Coordination Failure ◽  
Short Term ◽  
Balance Sheets ◽  
High Profile ◽  
Bank Run ◽  
The Global Financial Crisis

The U.K. bank Northern Rock became the first high-profile casualty of the global financial crisis of 2007–2008 when it suffered its depositor run in September 2007. In spite of the television images of long lines of depositors outside its branch offices, the run on Northern Rock was unlike the textbook retail depositor run caused by coordination failure. Also, contrary to received wisdom, its reliance on securitization was not an immediate factor in its failure. Rather, its problems stemmed from its high leverage coupled with reliance on institutional investors for short-term funding. When the de-leveraging in the credit markets began in August 2007, Northern Rock was uniquely vulnerable to the shrinking of lender balance sheets arising from the tick-up in measured risks. Financial regulation that relies on risk-weighted capital requirements is powerless against such runs. The Northern Rock case also offers lessons concerning the economics of short-term debt.

scholarly journals The global financial crisis and the behavior of short-term interest rates: International and Serbian aspects

2009 ◽  
Vol 56 (4) ◽  
pp. 491-506 ◽  
Author(s):  
Djordje Djukic ◽  
Malisa Djukic
Keyword(s):  
Financial Crisis ◽  
Interest Rates ◽  
Global Financial Crisis ◽  
Banking Industry ◽  
Developed Countries ◽  
Short Term ◽  
Cross Border ◽  
The Us ◽  
National Bank ◽  
The Global Financial Crisis

Throughout the current global financial crisis the market has continued to fall due to a lack of confidence of those banks that are not yet prepared to lend on the interbank money market. For instance, the negative repercussions of the crisis onto the Serbian financial sector have created a number of issues including a significant increase in lending rates, a difficulty, or impossibility, for the corporate sector to use cheap cross-border loans and a reduction in the supply of foreign exchange on that basis. The inability of the National Bank of Serbia to follow the aggressive reduction of the key interest rate that has been implemented by central banks in developed countries, partly explains the lack of a decline in short-term interest rates by the Serbian banking industry. The first section of the paper focuses on the effects of the financial crisis through the behavior of short-term interest rates in the US and Europe, while the second section gives an estimation of the effects of the global financial crisis on interest rates in the banking industry in Serbia.

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