scholarly journals The Contribution of Large Banking Institutions to Systemic Risk: What Do We Know? A Literature Review

2018 ◽  
Vol 69 (3) ◽  
pp. 231-257 ◽  
Author(s):  
Nils Moch
Keyword(s):  
Systemic Risk ◽  
Financial Stability ◽  
Recent Literature ◽  
Global Financial Crisis ◽  
Empirical Studies ◽  
Banking Regulation ◽  
Banking Institutions ◽  
Key Issues ◽  
The Global Financial Crisis ◽  
The Impact

Abstract Against the background of the global financial crisis, we review recent literature on the debate about “too big to fail”. This is (still) one of the key issues in banking literature since it determines the conditions for adequate banking regulation, financial stability and economic welfare. Analyzing 30 papers from 2009 to 2017, our work focusses on the impact of large banks on systemic risk. Large financial institutions can affect systemic risk by either contributing to systemic risk or being extremely exposed to sources of systematic risk and contagion. We find a considerable number of theoretical and empirical studies providing evidence that against the background of the constitution of present-day real financial systems, bank size is a key predictor for systemic risk and that the largest banks disproportionately contribute to overall risk. This relationship is found in samples of different composition, for various periods and with different measures covering diverse aspects of systemic risk.

scholarly journals Exchange rate regimes and external financial stability

2016 ◽  
Vol 61 (209) ◽  
pp. 27-43 ◽  
Author(s):  
Ovidiu Stoica ◽  
Iulian Ihnatov
Keyword(s):  
Exchange Rate ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Exchange Rate Regimes ◽  
Annual Data ◽  
The European Union ◽  
Level Of Economic Development ◽  
The Global Financial Crisis ◽  
The Impact ◽  
Alternative Regime

Financial stability within the framework of the global financial crisis has become a common topic for researchers and practitioners. In order to analyse the impact of exchange rate regimes on financial stability we use both the de jure and de facto exchange rate classifications. We apply the model to a 1999-2010 annual data sample for 135 countries and territories, grouped by the level of economic development. Our second focus is the investigation of the effects of the exchange rate regimes in three economic integration areas (member countries of the European Union 27, the Southern Common Market, and the Association of Southeast Asian Nations) on financial stability. Our results generally support the central banks? concerns that the flexibility of exchange rate regimes should be reduced in order to sustain financial stability; however, the findings are not robust when using alternative regime classifications.

The Impact of the Global Financial Crisis on Central Banking

2019 ◽  
pp. 170-192
Author(s):  
Alex Cukierman
Keyword(s):  
Financial Crisis ◽  
Interest Rates ◽  
Financial Stability ◽  
Inflation Targeting ◽  
Global Financial Crisis ◽  
The United States ◽  
Central Banking ◽  
The Global Financial Crisis ◽  
The Impact ◽  
Regulatory Reforms

This chapter describes the impacts of the global financial crisis on monetary policy and institutions. It argues that during the crisis, financial stability took precedence over traditional inflation targeting and discusses the emergence of unconventional policy instruments such as quantitative easing (QE), forex market interventions, negative interest rates, and forward guidance. It describes the interaction between the zero lower bound (ZLB) and QE, and proposals, such as raising the inflation target, to alleviate the ZLB constraint. The chapter discusses the consequences of the relative passivity of fiscal policies, “helicopter money,” and 100 percent reserve requirement. The crisis triggered regulatory reforms in which central banks’ objectives were expanded to encompass macroprudential regulation. The chapter evaluates recent regulatory reforms in the United States, the euro area, and the United Kingdom. It presents data on new net credit formation during the crisis and discusses implications for exit policies.

Money laundering and financial stability: does adverse publicity matter?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Bahriye Basaran-Brooks
Keyword(s):  
Money Laundering ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Banking System ◽  
Public Confidence ◽  
Content Type ◽  
Reputational Risk ◽  
The Global Financial Crisis ◽  
The Impact

Purpose Already suffering reputational damage from the global financial crisis, banks face a further loss of trust due to their poor money laundering (ML) compliance practices. As confidence-driven institutions, the loss of reputation stemming from inadequate compliance with regulations and policies labels banks as facilitators of crime and destroys public trust both in the bank itself, peer banks and the wider banking system. Considering the links between financial stability and adverse publicity about banks, this paper aims to critically examine the implications of ML-specific bank information on financial stability. Design/methodology/approach This paper adopts a content analysis and a theoretical discussion by critically evaluating the role of bank compliance information on stability with references to recent case studies. Findings This paper establishes that availability of information regarding a bank involved in or facilitating ML might pose a threat to financial stability if bank counterparties cut their ties with the bank in question and when bank stakeholders show a strong and sudden negative reaction to adverse publicity. Though recent ML scandals have not caused immediate instability, general loss of confidence associated with reputational risk have had a destabilising effect on affected banks’ capital and liquidity. Originality/value There has been surprisingly little discussion to date on the impact of publicly available bank information on financial stability and public confidence within the ML compliance framework. This paper approaches the issue of publicly available banking compliance information solely through the prism of public confidence and reputational risk and its impact on macro-stability by examining recent ML scandals.

Bank of Russia and bank supervision: Together forever?

2019 ◽  
pp. 85-98 ◽  
Author(s):  
Oleg V. Buklemishev ◽  
Dmitriy O. Vatolin
Keyword(s):  
Financial Markets ◽  
Global Financial Crisis ◽  
Banking Regulation ◽  
Banking Supervision ◽  
Bank Supervision ◽  
Macroprudential Policies ◽  
The Status ◽  
The Global Financial Crisis ◽  
Phase Out ◽  
The Impact

The paper discusses the feasibility of institutional changes in the Russian banking regulation (supervision). The historical and modern practice of the organization of regulatory activity in financial markets is described. Traditional theoretical arguments in favor of and against combining the functions of monetary policy and banking supervision within the Bank of Russia are considered and analyzed under current conditions. The impact of the global financial crisis is taken into account in terms of the need to institutionalize macroprudential policies and to coordinate them with microprudential policies. Based on this analysis the conclusion is made about the absence of fundamental preconditions for preserving the status quo in relation to banking supervision by the Bank of Russia in the context of considerable costs of correcting its errors. There commendation to phase out seniorage financing of banking supervision is given.

Bank Bailouts and Bail-Ins

2019 ◽  
pp. 629-684
Author(s):  
Raluca A. Roman
Keyword(s):  
Financial Institutions ◽  
Financial Stability ◽  
Recent Literature ◽  
Global Financial Crisis ◽  
Capital Requirements ◽  
Costs And Benefits ◽  
The Us ◽  
Social Costs And Benefits ◽  
The Global Financial Crisis ◽  
Bank Bailouts

During the global financial crisis, governments bailed out banks when their failures threatened to undermine economic and financial stability. After the crisis, governments tried to end bailouts by raising capital requirements, increasing supervisory rules and oversight, and introducing bail-in provisions that require creditors and/or equity holders to assume losses and help recapitalize distressed banks. Some important policy questions are whether bailouts have been effective in meeting their primary goals and whether bail-ins as alternatives can be effective in reducing the need for bailouts and resolving financial institutions facing distress and failure going forward. This chapter surveys the recent literature and other evidence from the US and EU on bailouts and bail-ins to better understand their economic and social costs and benefits. We also discuss briefly other methods to deal with the resolution of distressed large financial institutions.

An Overview of the Issues and the Book

2019 ◽  
pp. 3-15
Author(s):  
Pornpinun Chantapacdepong ◽  
Matthias Helble ◽  
Naoyuki Yoshino
Keyword(s):  
Emerging Markets ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Spillover Effects ◽  
Macroprudential Policy ◽  
Macroeconomic Shocks ◽  
Monetary Policies ◽  
Developed Economies ◽  
The Global Financial Crisis ◽  
The Impact

The introduction provides an overview of the book and summarizes its objectives. The book is divided into four parts. The first part provides an overview of the empirics of shock spillovers through trade and financial channels in general. The second part examines the mechanism driving financial spillovers, both price-oriented and quantity-oriented. The third part presents case studies of the implications of spillovers on real economies. The final part outlines implications for monetary policy and macroprudential policy. The objective of this book is to explain how macroeconomic shocks stemming from the global financial crisis and recent unconventional monetary policies in developed economies have affected macroeconomic and financial stability in emerging markets, with a particular focus on Asia. In particular, the book studies the spillover effects of macroeconomic shocks on financial markets and flows in emerging economies and the impact of recent macroeconomic shocks on real economies in emerging markets.

scholarly journals Securitisation and banking risk: what do we know so far?

2016 ◽  
Vol 8 (1) ◽  
pp. 2-16 ◽  
Author(s):  
Alper Kara ◽  
Aydin Ozkan ◽  
Yener Altunbas
Keyword(s):  
Global Financial Crisis ◽  
Empirical Studies ◽  
Future Research ◽  
Loan Pricing ◽  
Common View ◽  
Content Type ◽  
Risk Appetite ◽  
Before And After ◽  
The Global Financial Crisis ◽  
The Impact

Purpose – Bank securitisation is deemed to have been a major contributing factor to the 2007/2008 financial crises via fuelling credit growth accompanied by lower banks’ credit standards. Yet, prior to the crisis a common view was that securitisation activity makes the financial system more stable as risk was more easily diversified, managed and allocated economy-wide. The purpose of this paper is to review the extant literature to explore the so far generated knowledge on the impact of securitisation on banking risks. In particular, the authors examine the theoretical arguments and empirical studies on securitisation and banking risks before and after the global financial crisis of 2007/2008. Design/methodology/approach – Review and discussion of the literature. Findings – Theoretical literature univocally accentuate the undesirable consequences of securitisation, which may promote retention of riskier loans, undermine banks’ screening and monitoring incentives and enhance banks’ risk appetite. However, empirical evidence does not uniformly support the theoretical conclusions. If banks are securitisation active they lend more to risky borrowers, have less diversified portfolios and hold less capital, retain riskier loans and are aggressive in loan pricing. Others argue that securitisation reduces banks insolvency risk, increases profitability, provides liquidity and leads to greater supply of loans. Mortgage securitisation is an area where there is consistent evidence of bank risk taking via securitisation. Originality/value – The paper identifies open issues for future research.

scholarly journals ANALYSIS OF THE FINANCIAL STATUS OF THE BANKING SECTOR OF UKRAINE

2020 ◽  
pp. 155-162
Author(s):  
D. Tsyhaniuk ◽  
A. Rudniak
Keyword(s):  
Financial Stability ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Negative Impact ◽  
Banking System ◽  
Financial Condition ◽  
Systemic Risks ◽  
Significant Negative Impact ◽  
The Global Financial Crisis ◽  
The Impact

Considering the significant negative impact of financial crises on the banking sector in Ukraine, issues related to the assessment of the financial condition of banks are becoming particularly relevant. Analysis of the impact of the global financial crisis on the activities of Ukrainian banks in recent years has led to the conclusion that an effective, working mechanism for anti-crisis management has not yet been developed, focused on forecasting, overcoming, and limiting the spread of the crisis in the banking system. In this study, we analyzed the state of the banking system of Ukraine, the factors of crises that affected the financial condition of the banking sector of Ukraine in the context of 2009-2019; studied the main performance indicators of banks currently operating in Ukraine; analyzed the financial results of banking activities; Identified systemic risks that operate in the banking sector, as well as the largest risk factors for the financial sector. Calculated indicators of financial stability indicated the existence of systemic risks. According to the results of our study, the dynamics of the ratio of non-performing loans pointed out that the banking system of Ukraine, along with the unstable political and general economic situation, further increases systemic risks for the banking system and for the economy in the entirety; analysis of the Z-score indicator confirmed the presence of systemic risks and clearly demonstrated the duration and level of the crisis; an analysis of the dynamics and the political component of the country's incapacity index indicated that now Ukraine is in the most volatile situation in the last decade.

The Impact of Political and Economic Factors on Changes in Tourist Arrivals in the Broader Middle East at the Beginning of the 21st Century

2016 ◽  
Vol 38 (0) ◽  
pp. 27-56
Author(s):  
Rafał Matera ◽  
Klaudia Miksa
Keyword(s):  
Middle East ◽  
21St Century ◽  
Global Financial Crisis ◽  
Empirical Studies ◽  
Economic Factors ◽  
Political Factors ◽  
Political Security ◽  
The Global Financial Crisis ◽  
The Impact ◽  
Method Analysis

Purpose. To present the changes in tourist arrivals in the Broader Middle East in the 21st century and to point at potential political and economic reasons influencing these changes. Method. Analysis of the rankings and statistical sets (mainly from World Bank) and the review of the events influencing the changes in tourist arrivals to the Middle East. Findings. Analysis points out that political factors and political security strongly impacted tourist arrivals to the Broader Middle East at the beginning of the 21st century, even more strongly than the threats and effects of the global financial crisis. Research and conclusion limitations. Difficulties in the separation of political and economic factors should be underlined. Practical implications. The paper may be used as didactic support by students of economic and touristic fields of studies. The results may be also used by tourists and travel agencies. Originality. There is lack of specialized papers concentrating within the objective scope regarding this region or during this period of time. Type of paper. A combination of an overview with empirical studies.

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