Financial crises and global financial regulation

2015 ◽  
pp. 220-248
Author(s):  
Christopher Kobrak ◽  
Donald Brean
Keyword(s):  
Financial Crises ◽  
Financial Regulation

Financial Regulation

2011 ◽  
Vol 216 ◽  
pp. F4-F9 ◽  
Author(s):  
Ray Barrell ◽  
E. Phillip Davies
Keyword(s):  
Risk Taking ◽  
Financial Crises ◽  
Financial Regulation ◽  
Banking Regulation ◽  
Committee Report ◽  
Costs And Benefits ◽  
Basel Committee ◽  
The Core ◽  
The World ◽  
The Relationship

The financial crisis that engulfed the world in 2007 and 2008 has led to a wave of re-regulation and discussion of further regulation that has culminated in the proposals from the Basel Committee as well as those in the Vickers Committee report on Banking Regulation and Financial Crises. This issue of the Review contains a number of papers on Banking Regulation, covering many aspects of the debate, and we can put that debate in perspective through these papers and also by discussing our work on the relationship between bank size and risk taking, which is reported in Barrell et al. (2011). We addressed the causes of the crisis in the October 2008 Review, and began to look at the costs and benefits of bank regulation in Barrell et al. (2009). In that paper we argued that we needed to know the causes of crises and whether the regulators could do anything to affect them before we discussed new regulations. It is now generally agreed that increasing core capital reduces the probability of a crisis occurring, and most changes in regulation that are being discussed see this as the core of their toolkit. The work by the Institute macro team in Barrell et al. (2009) and in Barrell, Davis, Karim and Liadze (2010) was the first to demonstrate that there was a statistically important role for capital in defending against the probability of a crisis occurring, and our findings were widely used in the policy community in the debate over reform.

Tighter Financial Regulation and its Impact on Global Growth

2010 ◽  
Vol 213 ◽  
pp. F39-F44 ◽  
Author(s):  
Ray Barrell ◽  
Dawn Holland ◽  
Dilruba Karim
Keyword(s):  
Financial Crises ◽  
World Economy ◽  
Financial Regulation ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Benefit Analysis ◽  
Perceptions Of Risk ◽  
The Third ◽  
The World ◽  
Global Growth

The financial crisis that started in mid-2007 enveloped the world economy and caused a serious recession in most OECD countries. It is widely believed that it has also left a scar on potential output because it will have raised perceptions of risk and hence reduced the sustainable capital stock people wish to hold. It is inevitable that policymakers should ask what can be done to reduce the chances of this happening again, and it is equally inevitable that the banks would answer that it is too costly to do anything. There are four questions one must answer before it is possible to undertake a cost-benefit analysis of bank regulation. The first involves asking what are the costs of financial crises? The second involves asking what are the costs of financial regulation? The third involves asking what causes crises? The fourth, and perhaps the most important, involves asking whether regulators can do anything to reduce the risk of crises? Our overall approach to these issues is spelled out in a report written for the FSA in the aftermath of the crisis (see Barrell et al., 2009).

scholarly journals CAPITAL FLOW BONANZAS AS A FUNDAMENTAL INGREDIENT IN SPAIN'S FINANCIAL CRISES, 1850-2015

2020 ◽  
pp. 1-35
Author(s):  
Concha Betrán ◽  
Maria A. Pons
Keyword(s):  
Monetary Policy ◽  
Capital Flows ◽  
Financial Crises ◽  
Financial Regulation ◽  
Capital Flow ◽  
Regulatory Framework ◽  
Policy Implications ◽  
Financial Instability ◽  
Policy Regimes ◽  
Regulation And Supervision

ABSTRACT This paper analyses the mechanisms through which capital flows produced financial instability in Spain over a 165-year period. We study why and how capital bonanzas make crises more likely and severe, and whether their incidence varies depending on types of crises (currency, banking and debt crises). We conclude that most of them occurred in different monetary policy regimes, but they were associated with capital bonanzas in a liberal regulatory framework, both of which contributed to a higher likelihood and greater severity of crises. The analysis of the different monetary policy regimes, financial structures and the types of crises allows us to draw some policy implications that emphasise the need for sound financial regulation and supervision.

scholarly journals Social Harm and the Vagaries of Financial Regulation in the UK

2015 ◽  
Vol 4 (4) ◽  
pp. 91-105 ◽  
Author(s):  
Vincenzo Ruggiero
Keyword(s):  
Financial Crises ◽  
Financial Regulation ◽  
Financial Crime ◽  
Clear Indication ◽  
Social Harm ◽  
The Uk

The premise of this article is that financial crises, whether they occur as a result of legitimate of illegitimate conduct, cause social harm and victimisation. The 2008 bank crisis is a clear indication of this, as some of the financial operations determining it possessed a criminal nature while some did not. This article is concerned with both typologies, namely with illicit and licit harmful behaviour adopted by financial actors. After some general introductory notes, the first section of the paper focuses on the measures proposed or adopted in response to the 2008 crisis in the UK. This is followed by the presentation of a number of recent cases proving that, despite recent regulatory efforts, large loopholes are still present which allow forms of financial crime to thrive. Some final observations on the difficulties encountered by regulatory attempts complete the paper.

Financial Regulation: Lessons from the Recent Financial Crises

2011 ◽  
Vol 49 (1) ◽  
pp. 120-128 ◽  
Author(s):  
Takeo Hoshi
Keyword(s):  
United States ◽  
Financial Institutions ◽  
Financial Crises ◽  
Financial Regulation ◽  
Financial System ◽  
The United States ◽  
Regulatory Framework ◽  
Policy Recommendations ◽  
Financial Regulations

The experiences of the financial crises in the United States recently and in Japan in the 1990s suggest two lessons for future financial regulations. First, the lack of an orderly resolution mechanism for large and complex financial institutions created serious problems. Second, it is important to distinguish between individual financial institutions' health and stability of the whole financial system. Policy recommendations in the Squam Lake Report address these issues well. The Dodd–Frank Act could provide an effective regulatory framework to implement these recommendations, but the success depends on the details of the regulations that have not been specified. (JEL E44, E52, G01, G21, G28, L51)

scholarly journals BETTER THE DEVIL YOU KNOW THAN THE DEVIL YOU DON’T − FINANCIAL CRISES BETWEEN AMBIGUITY AVERSION AND SELECTIVE PERCEPTION

2018 ◽  
Vol 2 (1) ◽  
pp. 155
Author(s):  
Peter Scholz ◽  
David Grossmann ◽  
Sinan Krueckeberg
Keyword(s):  
Economic Policy ◽  
Financial Crises ◽  
Financial Regulation ◽  
Ambiguity Aversion ◽  
Total Sample ◽  
Subprime Crisis ◽  
Policy Makers ◽  
Market Participants ◽  
Selective Perception ◽  
The Devil

Aim: Financial crises are dangerous and frightening events with potentially severe consequences for investors, financial systems and even whole economies. Hence, we suppose that market participants show increased proneness to emotionally biased decisions during times of market distress. We test our hypothesis by analyzing two well-known behavioral effects: ambiguity aversion and selective perception. Design / Research methods: The authors should clearly explain the way in which the aim or objective is achieved. The main research methods as well as the approach to the research should be provided that enable effective dealing with the paper’s aim.First, we use GARCH volatilities of major stock indices as a measure of market distress and monthly data from the Economic Policy Uncertainty Indicator (EPUI) as a proxy for the level of market uncertainty. By estimating the Granger causality, we test whether uncertainty causally influences market volatility, which could be interpreted as a sign of ambiguity aversion of market participants. Second, we use sub-indices of the EPUI regarding financial regulation, monetary policy, and economic policy as a proxy for market awareness of these topics. By regressing on GARCH volatilities, which serve again as the measure for crises, we analyze if investors’ attention differs depending on market distress due to selective perception Conclusions / findings: Overall, we find mixed results. For ambiguity aversion, we find causality for the total sample as well as for the subsamples of the first oil crisis, the Latin America crisis, the Asian crisis, and the subprime crisis. For selective perception, we find significant results for the total sample as well, as for the Dot.Com bubble and the subprime crisis.   Originality / value of the article: We add value by examining specific severe financial crises with respect to behavioral aspects of market participants. We want to learn whether the awareness of investors regarding important topics like monetary policy, financial regulation, and economic policy is stable over time and if uncertainty drives the market distress or vice versa. This knowledge is important to investors and policy makers. Implications of the research: Investors and decision-makers need to focus e.g. on current discussions regarding financial regulation not only in times of distress but also in normal times. Otherwise, policy makers will be forced to react in times of pressure and cannot proactively devise regulation. Limitations of the research: First, we did not check for spill-over effects. The question if volatility creates subsequent ripple effects in our framework is left for future research.Second, for the Japanese crisis we did not find causality in our ambiguity aversion analysis. The question whether the link between levels of uncertainty and volatility is stronger once a bubble bursts on domestic soil remains unanswered in our paper.

The Oxford Handbook of Banking and Financial History

2016 ◽  
Keyword(s):  
Financial Crisis ◽  
Great Depression ◽  
Economic History ◽  
Financial Crises ◽  
Financial Regulation ◽  
Financial History ◽  
The Great Depression ◽  
Historical Reflection ◽  
Methodological Aspects

The financial crisis of 2008 aroused widespread interest in banking and financial history among policy makers, academics, journalists, and even bankers, in addition to the wider public. References in the press to the term ‘Great Depression’ spiked after the failure of Lehman Brothers in November 2008, with similar surges in references to ‘economic history’ at various times during the financial turbulence. In an attempt to better understand the magnitude of the shock, there was a demand for historical parallels. How severe was the financial crash? Was it, in fact, the most severe financial crisis since the Great Depression? Were its causes unique or part of a well-known historical pattern? And have financial crises always led to severe depressions? Historical reflection on the recent financial crises and the long-term development of the financial system go hand in hand. This volume provides the material for such a reflection by presenting the state of the art in banking and financial history. Nineteen highly regarded experts present twenty-one chapters on the economic and financial side of banking and financial activities, primarily—though not solely—in advanced economies, in a long-term comparative perspective. In addition to paying attention to general issues, not least those related to theoretical and methodological aspects of the discipline, the volume approaches the banking and financial world from four distinct but interrelated angles: financial institutions, financial markets, financial regulation, and financial crises.

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