Understanding the changing role of central banks and their recent novel policies is essential for analysing many economic and financial issues, ranging from financial regulation and crisis, to ...exchange rate dynamics and regime changes, and QE and prolonged low interest rates. This book features contributions by the world's leading experts on central banking, providing in accessible essays a fascinating review of today's key issues for central banks. Luminaries including Stephen Cecchetti, Takatoshi Ito, Anil Kashyap, Mervyn King, Donald Kohn, Otmar Issing and Hyun Shin are joined by Charles Goodhart of the London School of Economics and Political Science, whose many achievements in the field of central banking are honoured as the inspiration for this book. The Changing Fortunes of Central Banking discusses the developing role of central banks in seeking monetary and financial stabilisation, while also giving suggestions for model strategies. This comprehensive review will appeal to central bankers, financial supervisors and academics.
The price of complexity in financial networks Battiston, Stefano; Caldarelli, Guido; May, Robert M. ...
Proceedings of the National Academy of Sciences - PNAS,
09/2016, Letnik:
113, Številka:
36
Journal Article
Recenzirano
Odprti dostop
Financial institutions form multilayer networks by engaging in contracts with each other and by holding exposures to common assets. As a result, the default probability of one institution depends on ...the default probability of all of the other institutions in the network. Here, we show how small errors on the knowledge of the network of contracts can lead to large errors in the probability of systemic defaults. From the point of view of financial regulators, our findings show that the complexity of financial networks may decrease the ability to mitigate systemic risk, and thus it may increase the social cost of financial crises.
O artigo em questão aborda a elaboração de um plano de ação fundamentado na fase P do Ciclo PDCA para a solução de um problema no setor de manutenção de um centro de serviços de logística de uma ...instituição financeira. Através da realizaçãoo de Brainstorming com os responsáveis pelo setor, foram levantados diversos problemas, a seleção foi feita durante a fase crítica da técnica e optou-se pela pendência na alteração do status das ordens de serviço por parte das agências, conforme será detalhado no estudo de caso. Ainda nesse contexto, explicam-se as técnicas utilizadas defendidas por diversos autores pesquisados.
Highlighting the sources, processes and outcomes of moral struggles in and around markets, this volume advances our current understanding of markets and their contested moralities.
Financial cooperatives play an important role in the financial systems of many countries. They act as a safe haven for deposits and are major sources of credit for households and small- and ...medium-sized firms. A not-for-profit orientation (in many cases) and a focus on maximising benefits to members have ensured the enduring popularity and sustainability of financial cooperatives. This is particularly evident since the global financial crisis when financial cooperatives continued to extend credit to members as many profit-orientated commercial banks restricted credit to households and firms. The overarching theme of the first part of this review is the structural and behavioural characteristics of financial cooperatives. In this part we consider, the origin and diffusion of financial cooperatives, network arrangements, the business model, relationship banking, balancing the interest of members, tax treatment and regulatory framework. The second part has performance and contribution to the real economy as the overarching theme. In this part we consider, efficiency and sustainability, mergers, acquisitions and failures, the benefits (and challenges) of FinTech and the contribution of financial cooperatives to the real economy including during times of crisis. The paper concludes with a summary of what we now know (and do not know) about financial cooperatives and provides suggestions as to where future research may usefully concentrate.
•This paper reviews research on cooperative financial institutions in two parts.•The theme of the first part is structural and behavioural characteristics of financial cooperatives.•In the second part, the theme is performance and contribution to the real economy.
Prone to Fail Duffie, Darrell
The Journal of economic perspectives,
01/2019, Letnik:
33, Številka:
1
Journal Article
Recenzirano
Odprti dostop
The financial crisis that began in 2007 was triggered by over-leveraged homeowners and a severe downturn in US housing markets. However, a reasonably well-supervised financial system would have been ...much more resilient to this and other types of severe shocks. Instead, the core of the financial system became a key channel of propagation and magnification of losses suffered in the housing market. Critical financial intermediaries failed, or were bailed out, or dramatically reduced their provision of liquidity and credit to the economy. In short, the core financial system ceased to perform its intended functions for the real economy at a reasonable level of effectiveness. As a result, the impact of the housing-market shock on the rest of the economy was much larger than necessary. In this essay, I will review the key sources of fragility in the core financial system. I discuss the weakly supervised balance sheets of the largest banks and investment banks; the run-prone designs and weak regulation of the markets for securities financing and over-the-counter derivatives; the undue reliance of regulators on market discipline; and the interplay of too-big-to-fail and the failure of market discipline. Finally, I point to some significant positive strides that have been made since the crisis: improvements in the capitalization of the largest financial institutions, a reduction of unsafe practices and infrastructure in the markets for securities financing and derivatives, and a significantly reduced presumption that the largest financial firms will be bailed out by taxpayer money in the future. But I will also mention some remaining challenges to financial stability that could be addressed with better regulation and market infrastructure.
The panic of 2007–2008 was a run on the sale and repurchase market (the repo market), which is a very large, short-term market that provides financing for a wide range of securitization activities ...and financial institutions. Repo transactions are collateralized, frequently with securitized bonds. We refer to the combination of securitization plus repo finance as “securitized banking” and argue that these activities were at the nexus of the crisis. We use a novel data set that includes credit spreads for hundreds of securitized bonds to trace the path of the crisis from subprime-housing related assets into markets that had no connection to housing. We find that changes in the LIB-OIS spread, a proxy for counterparty risk, were strongly correlated with changes in credit spreads and repo rates for securitized bonds. These changes implied higher uncertainty about bank solvency and lower values for repo collateral. Concerns about the liquidity of markets for the bonds used as collateral led to increases in repo haircuts, that is the amount of collateral required for any given transaction. With declining asset values and increasing haircuts, the US banking system was effectively insolvent for the first time since the Great Depression.
We investigate the interconnectedness and systemic risk of China's financial institutions by constructing dynamic tail-event driven networks (TENETs) at 1% risk level based on weekly returns of 24 ...publicly-listed financial institutions from 2008 to 2016. Total connectedness reaches a peak when the system exhibits stress, especially during the recent period from mid-2014 to end-2016. Large commercial banks and insurers usually exhibit systemic importance, but some small firms are systemically important due to their high level of incoming (outgoing) connectedness. Our results provide useful information to regulators when they assess systemic risk of financial institutions and formulate macroprudential supervision policy.
•Dynamic TENETs for 24 Chinese financial institutions are built for measuring interconnectedness and systemic risk.•Total connectedness of the TENET reaches a record high during the recent period from mid-2014 to end-2016.•Dynamic indicators (e.g., SRR and SRE indices) provide an early-warning function for identifying systemic risk.•One potential reason for the high level of systemic risk is the increasing size of China's shadow banking system.•Some small firms are systemically important due to their high level of incoming or outgoing connectedness.
The regulation of large interconnected financial institutions has become a key policy issue. To improve financial stability, regulators have proposed limiting banks’ size and interconnectedness. I ...estimate a network-based model of the over-the-counter interbank lending market in the US and quantify the efficiency-stability implications of this policy. Trading efficiency decreases with limits on interconnectedness because the intermediation chains become longer. While restricting the interconnectedness of banks improves stability, the effect is non-monotonic. Stability also improves with higher liquidity requirements, when banks have access to liquidity during the crisis, and when failed banks’ depositors maintain confidence in the banking system.
•Expectation for public bailouts lowers daily funding costs for SIFIs.•The market valuation for the government support is time varying.•We estimate the time-invariant, structural subsidy value based ...on credit ratings.•It was already sizable, 60bp, as of the end-2007, before the crisis.•It increased to 80bp by the end-2009 for a large worldwide sample of banks.
Claimants to Systemically Important Financial Institutions (SIFIs) would receive transfers when governments are forced into bailouts. Ex ante, this bailout expectation lowers SIFIs’ daily funding costs. The funding cost advantage reflects both the structural level of the government support and the time-varying market valuation for such a support. Based on a large worldwide sample of banks, we estimate the value of the structural subsidy, by exploiting expectations of state support embedded in credit ratings and by applying the long-run average value of the rating bonus. The value of the structural subsidy was already sizable, 60basis points (bp), as of the end-2007, before the crisis. It increased to 80bp by the end-2009.
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