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Author: Shasta Shakya
Publisher:
ISBN:
Category :
Languages : en
Pages :
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This dissertation consists of three chapters each of which explores different topics in the area of banking. In the first chapter, I ask how a banks connectedness affects its financial stability and what mechanisms amplify or mitigate this effect. I consider connectedness arising due to linkages that are formed between banks when they are exposed to common housing markets, and investigate whether such connectedness explains stability around the 2007 housing crash. I show that linkages facilitate contagion of risk, and that high leverage and securitization activity of other banks amplify contagion while high liquidity ratio of other banks minimizes contagion. Finally, I provide policy implications by suggesting minimum levels of capital and liquidity ratios that could contain contagion.In the second chapter, I study the impact of a newly introduced liquidity requirement in the banking sector the Liquidity Coverage Ratio (LCR) rule on loan contract terms. This chapter employs a differences-in-differences testing method, and exploits the setting of multiple events arising from the timing of the implementation of the rule to identify the effect of LCR. I do not find evidence of high costs to lenders due to this rule, because loan pricing terms do not change in an average loan post LCR. However, banks limit their risk exposure by increasing collateral requirements. For banks that are ex-ante expected to find the rule less costly, I find evidence of cost savings because they offer lower spreads. Further results suggest that while banks provided extra benefits to relationship borrowers in the form of lower spreads pre LCR, this is no longer true post LCR, and they reduce risk exposure to borrowers with weaker relationship strength by increasing collateral requirements.In the third chapter, I study the relationship between liquidity created by a bank and its overall financial stability. I contrast results during the period of 2007 financial crisis with those during normal times. While I find that overall liquidity creation is a risky activity during both times, breaking it into different components (on- vs. off-balance sheet, asset side vs. liability side) reveals nuances on the driving forces behind this relationship. While asset side liquidity creation decreases stability during both times, results show that the effects of other components depend on overall market conditions. During the crisis period, off-balance sheet liquidity creation hurts stability, while it has no apparent benefit during normal times. Liability side liquidity creation improves stability during crisis, however there is evidence of costs of such activity during normal times. Further results show that liquid holdings and core deposits can mitigate the costs of liquidity creation during crisis without significantly hurting benefits during normal times.
Author: Shasta Shakya
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This dissertation consists of three chapters each of which explores different topics in the area of banking. In the first chapter, I ask how a banks connectedness affects its financial stability and what mechanisms amplify or mitigate this effect. I consider connectedness arising due to linkages that are formed between banks when they are exposed to common housing markets, and investigate whether such connectedness explains stability around the 2007 housing crash. I show that linkages facilitate contagion of risk, and that high leverage and securitization activity of other banks amplify contagion while high liquidity ratio of other banks minimizes contagion. Finally, I provide policy implications by suggesting minimum levels of capital and liquidity ratios that could contain contagion.In the second chapter, I study the impact of a newly introduced liquidity requirement in the banking sector the Liquidity Coverage Ratio (LCR) rule on loan contract terms. This chapter employs a differences-in-differences testing method, and exploits the setting of multiple events arising from the timing of the implementation of the rule to identify the effect of LCR. I do not find evidence of high costs to lenders due to this rule, because loan pricing terms do not change in an average loan post LCR. However, banks limit their risk exposure by increasing collateral requirements. For banks that are ex-ante expected to find the rule less costly, I find evidence of cost savings because they offer lower spreads. Further results suggest that while banks provided extra benefits to relationship borrowers in the form of lower spreads pre LCR, this is no longer true post LCR, and they reduce risk exposure to borrowers with weaker relationship strength by increasing collateral requirements.In the third chapter, I study the relationship between liquidity created by a bank and its overall financial stability. I contrast results during the period of 2007 financial crisis with those during normal times. While I find that overall liquidity creation is a risky activity during both times, breaking it into different components (on- vs. off-balance sheet, asset side vs. liability side) reveals nuances on the driving forces behind this relationship. While asset side liquidity creation decreases stability during both times, results show that the effects of other components depend on overall market conditions. During the crisis period, off-balance sheet liquidity creation hurts stability, while it has no apparent benefit during normal times. Liability side liquidity creation improves stability during crisis, however there is evidence of costs of such activity during normal times. Further results show that liquid holdings and core deposits can mitigate the costs of liquidity creation during crisis without significantly hurting benefits during normal times.
Author: Victoria Böhnke
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Author: Gerald A. Epstein
Publisher: Edward Elgar Publishing
ISBN: 1783472642
Category : Business & Economics
Languages : en
Pages : 391
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Book Description
The many forces that led to the economic crisis of 2008 were in fact identified, analyzed and warned against for many years before the crisis by economist Jane D�Arista, among others. Now, writing in the tradition of D�Arista's extensive work, the
Author: Milton Friedman
Publisher: Ravenio Books
ISBN:
Category : Business & Economics
Languages : en
Pages : 166
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Book Description
MONETARY PROBLEMS—a by-product of the indirect system of exchange—have long plagued the nations of the world. History is replete with instances in which such problems led not only to economic instability and uncertainty, but to political crises as well. In our own American experience there has hardly been a period when the economy was not beset by one type of monetary ill or another. Consider, for example, the more important monetary disturbances of our own time, viz., those of the last 30 years or so. Our legacy from the financial collapse of 1929 was a monetary and banking system which was virtually defunct. Though some progress was made in shoring up our monetary and banking institutions after 1933, this of itself was inadequate to help us escape the deflation and mass unemployment which persisted throughout the 1930’s. For the decade of the 1940’s, of course, the pendulum swung to the other side of the arc. Following the outbreak of World War II, and particularly after our direct involvement in 1941, an attempt was made to hold the line against inflation. This attempt achieved at best only partial success. Support by the Federal Reserve System of the prices of government securities, wartime military expenditures, the postwar investment boom, and the postwar pent-up demand for consumer goods backed by liquid assets acquired during the War combined to produce a rise in prices throughout the War and early postwar period. Although inflation subsided somewhat after 1948, it was intensified by the outbreak of hostilities in Korea in the period after 1950. During the latter part of 1953, and throughout 1954 and 1955, prices remained relatively stable. But in 1956, the inflationary rise received a new stimulus. Caused largely by another investment boom, the inflationary movement had such momentum that it caused prices to rise even in the face of the 1957-1958 recession. Professor Friedman’s objective in this third of the Moorhouse I. X. Millar Lecture Series is certainly not one of finding a formula which will eradicate all uncertainty and instability attending monetary disturbances. For these, as he puts it, are “unavoidable concomitants of progress and change.” However, it is possible to attenuate further the amplitude of our fluctuations by modifying, and in some cases completely revamping the monetary and banking arrangements currently in force in the United States. Specifically, this is the task to which Professor Friedman addresses himself. This classic is organized as follows: Chapter One. The Background of Monetary Policy Why Should Government Intervene in Monetary and Banking Questions? The Historical Background The Period From 1837 To 1843 The Contraction of 1873-79 The 1890’s The Contraction of 1907-08 Under the Federal Reserve System Conclusion Chapter Two. The Tools of the Federal Reserve System Tools of Specific Credit Policy Eligibility Requirements Control Over Margin Requirements Control Over Consumer Installment Credit Control Over Interest Paid by Banks on Deposits Tools of Monetary Policy The Sufficiency of Open Market Operations Rediscounting Variation in Reserve Requirements Conclusion Chapter Three. Debt Management and Banking Reform Debt Management Banking Reform Defects of Present Banking System Possible Remedies How 100% Reserves Would Work Transition to 100% Reserves The Relation of 100% Reserves to Debt Management Why Interest Should Be Paid on Reserves How Interest Payments on Reserves Might Be Determined Conclusion Chapter Four. The Goals and Criteria of Monetary Policy International Monetary Relations Internal Monetary Policy Conclusion Summary of Recommendations
Author: Board of Governors of the Federal Reserve System
Publisher:
ISBN: 9780894991967
Category : Banks and Banking
Languages : en
Pages : 0
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Book Description
Provides an in-depth overview of the Federal Reserve System, including information about monetary policy and the economy, the Federal Reserve in the international sphere, supervision and regulation, consumer and community affairs and services offered by Reserve Banks. Contains several appendixes, including a brief explanation of Federal Reserve regulations, a glossary of terms, and a list of additional publications.
Author: Dimitri B. Papadimitriou
Publisher: Palgrave Macmillan
ISBN: 9780312159351
Category : Business & Economics
Languages : en
Pages : 441
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Book Description
Economists from academia, banks, and such institutions as the Federal Reserve Board and the World Bank offer 14 essays with three goals: to explain how US emergency banking legislation in the 1930s to deal with the depression managed to produce stability in the financial system for nearly half a century; to explore the reforms during the 1980s that led to the savings and loan debacle and other disruptions in the 1990s; and to offer policy proposals to encourage both the financing of capital development and a safe payments system. Annotation c. by Book News, Inc., Portland, Or.
Author: Charles Albert Eric Goodhart
Publisher: MIT Press
ISBN: 9780262071673
Category : Business & Economics
Languages : en
Pages : 560
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Book Description
As economic advisor to the Bank of England for many years, C. A. E. Goodhart is uniquely positioned to assess the role of the central bank in the modern financial system. This book brings together twenty-one of his previously published articles dealing with the changing functions of central banks over time, recent efforts to maintain price stability, and debates over specific financial regulation proposals in the UK. Although the current day-to-day operations of central banks are subject to continuous comment and frequent criticism, their structural role within the economic system as a whole has generally been accepted without much question, despite several attempts by economists in recent decades to challenge the value of the institution. C. A. E. Goodhart brings his knowledge of both the theoretical arguments and the actual working of central banks to bear in these essays. Part I looks at the general purposes and functions of central banks within the financial system and their evolution over time. Part II concentrates on the current objectives and operations of central banks, and the maintenance of price stability in particular. Part III analyzes the broader issues of financial regulation.
Author: Jiahong Gao
Publisher:
ISBN:
Category : Banking
Languages : en
Pages : 209
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Book Description
The focus of my dissertation is to study how the industrial organization of the banking sector affects the risk-taking behavior of financial intermediaries and the degree of instability within the banking system. In the first chapter, I ask whether the notion that market concentration promotes stability survives when the government intervention during a crisis is properly taken into account. To this end, I study suspension policies in an environment without commitment, following Ennis and Keister (2009). When the BA only values the welfare of depositors, the degree of fragility is independent of the competitive structure of the banking system. However, having a BA that puts some weight on the monopolist's welfare can serve as a commitment device in suspending payments earlier to protect bank profits, which reduces fragility under a monopoly. The second chapter investigates how the industrial organization of the banking sector may be associated with different triggers for the system to be unstable. In particular, my analysis is based on a modern version of the Diamond and Dybvig (1983) framework in which a self-fulfilling run occurs at a non-trivial probability and banks lack commitment in determining the structure of liabilities as in Ennis and Keister (2010). I find that the possibility that the monopolistic bank may lose its rents in times of stress encourages it to be relatively illiquid. As a result, a monopoly is more stable (fragile) than perfect competition if the ex-ante probability of a financial crisis is below (above) some threshold. The last chapter examines the effects of bank failures and market concentration on credit market activity across United States. In particular, I employ a recent 17-year panel of all FDIC-insured commercial banks over the period 1994Q3 to 2010Q4 and construct state-specific measures of bank failures and deposit concentration. Using a seemingly unrelated regressions (SUR) model, I find that over the full sample, banks issued less loans if the likelihood of a bank failure in a given state increased. Further, banks in states with higher degrees of concentration also issued less loans. Interestingly, there appears evidence that market concentration serves as a buffer against instability.
Author: Ru Xie
Publisher:
ISBN:
Category :
Languages : de
Pages : 128
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Book Description
Author: Mónica López-Puertas Lamy
Publisher: Ed. Universidad de Cantabria
ISBN: 8486116813
Category :
Languages : en
Pages : 32
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Book Description
El principal objetivo de este trabajo consiste en analizar los efectos que la estructura de propiedad bancaria tiene sobre la toma de riesgos, a nivel microeconómico y sobre el riesgo sistémico, a nivel macroeconómico. Para ello se desarrolla un modelo de competencia oligopolística y se analizan las propiedades del equilibrio de mercado en términos de beneficios, cuota de mercado y micro y macro estabilidad financiera cuando un banco comercial, maximizador de beneficios, compite contra un banco no orientado hacia los beneficios (stakeholder bank). Los resultados teóricos son validados empíricamente usando datos bancarios de 72 países durante el periodo 1997-2007. Concretamente se muestra que a) los stakeholder banks son menos arriesgados que los bancos comerciales, b) cualquier banco es más arriesgado cuando compite contra un stakeholder bank en lugar de contra un banco comercial, c) a nivel sistémico la presencia de stakeholder banks aumenta la estabilidad financiera, d) el efecto de la regulación bancaria y de la competencia en la toma de riesgos depende de la estructura de propiedad del banco, e) la concentración accionarial incrementa el riesgo bancario, f) el diseño de los incentivos gerenciales tiene un efecto muy significativo sobre la toma de riesgos bancarios.
