The bankers' new clothes Admati, Anat; Admati, Anat; Hellwig, Martin
2014., 20130215, 2013-02-15, 2014-03-23, 20130101, ♭2013, 2013
eBook
What is wrong with today's banking system? The past few years have shown that risks in banking can impose significant costs on the economy. Many claim, however, that a safer banking system would ...require sacrificing lending and economic growth.The Bankers' New Clothesexamines this claim and the narratives used by bankers, politicians, and regulators to rationalize the lack of reform, exposing them as invalid.
Admati and Hellwig argue we can have a safer and healthier banking system without sacrificing any of the benefits of the system, and at essentially no cost to society. They show that banks are as fragile as they are not because they must be, but because they want to be--and they get away with it. Whereas this situation benefits bankers, it distorts the economy and exposes the public to unnecessary risks. Weak regulation and ineffective enforcement allowed the buildup of risks that ushered in the financial crisis of 2007-2009. Much can be done to create a better system and prevent crises. Yet the lessons from the crisis have not been learned.
Admati and Hellwig seek to engage the broader public in the debate by cutting through the jargon of banking, clearing the fog of confusion, and presenting the issues in simple and accessible terms.The Bankers' New Clothescalls for ambitious reform and outlines specific and highly beneficial steps that can be taken immediately.
The international financial community blamed the Asian crisis of 1997-1998 on deep failures of domestic financial governance. To avoid similar crises in the future, this community adopted and ...promoted a set of international "best practice" standards of financial governance. The G7 asked specialized public and private sector bodies to set international standards, and tasked the International Monetary Fund and the World Bank with their global dissemination. Non-Western countries were thereby encouraged to emulate Western practices in banking and securities supervision, corporate governance, financial disclosure, and policy transparency.
InGoverning Finance, Andrew Walter explains why Indonesia, Malaysia, South Korea, and Thailand-key targets and test cases of this international standards project-were placed under intense pressure to transform their domestic financial governance. Walter finds that the depth of the economic crisis, and more enduring aspects of Asian capitalism, such as family ownership of firms, made substantive compliance with international standards very costly for the private sector and politically difficult for governments to achieve. In spite of international compliance pressure, the result was varying degrees of cosmetic or "mock" compliance. In a book containing lessons for any agency or country attempting to implement lasting change in financial governance, Walter emphasizes the limits of global regulatory convergence in the absence of support from domestic politicians, institutions, and firms.
In How Informal Institutions Matter, Zeki Sarigil examines the role of informal institutions in sociopolitical life and addresses the following questions: Why and how do informal institutions emerge? ...To ask this differently, why do agents still create or resort to informal institutions despite the presence of formal institutional rules and regulations? How do informal institutions matter? What roles do they play in sociopolitical life? How can we classify informal institutions? What novel types of informal institutions can we identify and explain? How do informal institutions interact with formal institutions? How do they shape formal institutional rules, mechanisms, and outcomes? Finally, how do existing informal institutions change? What factors might trigger informal institutional change? In order to answer these questions, Sarigil examines several empirical cases of informal institution as derived from various issue areas in the Turkish sociopolitical context (i.e., civil law, conflict resolution, minority rights, and local governance) and from multiple levels (i.e., national and local).
Throughout the Middle East, Islamist charities and social welfare
organizations play a major role in addressing the socioeconomic needs of Muslim
societies, independently of the state. Through case ...studies of Islamic medical
clinics in Egypt, the Islamic Center Charity Society in Jordan, and the Islah
Women's Charitable Society in Yemen, Janine A. Clark examines the structure and
dynamics of moderate Islamic institutions and their social and political impact.
Questioning the widespread assumption that such organizations primarily serve the
poorer classes, Clark argues that these organizations in fact are run by and for the
middle class. Rather than the vertical recruitment or mobilization of the poor that
they are often presumed to promote, Islamic social institutions play an important
role in strengthening social networks that bind middle-class professionals,
volunteers, and clients. Ties of solidarity that develop along these horizontal
lines foster the development of new social networks and the diffusion of new
ideas.
How central banks and independent regulators can support rather than challenge constitutional democracy
Unelected Power lays out the principles needed to ensure that central bankers and other ...independent regulators act as stewards of the common good. Blending economics, political theory, and public law, this critically important book explores the necessary conditions for delegated but politically insulated power to be legitimate in the eyes of constitutional democracy and the rule of law. It explains why the solution must fit with how real-world government is structured, and why technocrats and their political overseers need incentives to make the system work as intended. Now with a new preface by Paul Tucker, Unelected Power explains how the regulatory state need not be a fourth branch of government free to steer by its own lights, and how central bankers can emulate the best of judicial self-restraint.
After the Crash Sharyn O'Halloran, Thomas Groll
10/2019
eBook
The 2008 crash was the worst financial crisis and the most severe economic downturn since the Great Depression. It triggered a complete overhaul of the global regulatory environment, ushering in a ...stream of new rules and laws to combat the perceived weakness of the financial system. While the global economy came back from the brink, the continuing effects of the crisis include increasing economic inequality and political polarization. After the Crash is an innovative analysis of the crisis and its ongoing influence on the global regulatory, financial, and political landscape, with timely discussions of the key issues for our economic future. It brings together a range of experts and practitioners, including Joseph Stiglitz, a Nobel Prize winner; former congressman Barney Frank; former treasury secretary Jacob Lew; Paul Tucker, a former deputy governor of the Bank of England; and Steve Cutler, general counsel of JP Morgan Chase during the financial crisis. Each poses crucial questions: What were the origins of the crisis? How effective were international and domestic regulatory responses? Have we addressed the roots of the crisis through reform and regulation? Are our financial systems and the global economy better able to withstand another crash?After the Crash is vital reading as both a retrospective on the last crisis and an analysis of possible sources of the next one.
Islamic finance is growing at an astonishing rate and is now a 1200 billion industry, with operations in over 100 countries. This book explains the paradox of a system rooted in the medieval era ...thriving in the global economy. Coverage is exhaustively comprehensive, defining Islamic finance in its broadest sense to include banks, mutual funds, securities firms and insurance (or takaful) companies. The author places Islamic finance in the context of the global political and economic system and covers a wide variety of issues such as the underlying principles of Islamic finance, the range of Islamic financial products, and country differences. He also discusses a number of economic, political, regulatory and religious concerns and challenges. This second edition has been completely revised and updated to take into account the great changes and developments in the field in recent times. It includes the impact of the 9/11 and 7/7 terrorist attacks on the industry, the new forms of interaction with Western financial institutions, the emergence of innovative products such as sukuk, attempts by a broad range of financial centres - including Kuala Lumpur, London, Singapore, Bahrain and Dubai - to become global hubs of Islamic finance, and the repercussions of the 2008 global financial meltdown on Islamic institutions.
The “conventional wisdom” in academic and policy circles argues that, while large and foreign banks are generally not interested in serving SMEs, small and niche banks have an advantage because they ...can overcome SME opaqueness through relationship lending. This paper shows that there is a gap between this view and what banks actually do. Banks perceive SMEs as a core and strategic business and seem well-positioned to expand their links with SMEs. The intensification of bank involvement with SMEs in various emerging markets is neither led by small or niche banks nor highly dependent on relationship lending. Moreover, it has not been derailed by the 2007–2009 crisis. Rather, all types of banks are catering to SMEs and large, multiple-service banks have a comparative advantage in offering a wide range of products and services on a large scale, through the use of new technologies, business models, and risk management systems.
This paper argues that the extent of financial contagion exhibits a form of phase transition: as long as the magnitude of negative shocks offecting financial institutions are sufficiently small, a ...more densely connected financial network (corresponding to a more diversified pattern of interbank liabilities) enhances financial stability. However, beyond a certain point, dense interconnections serve as a mechanism for the propagation of shocks, leading to a more fragile financial system. Our results thus highlight that the same factors that contribute to resilience under certain conditions may function as significant sources of systemic risk under others.
Private associations abounded in the ancient Greek world and beyond, and this volume provides the first large-scale study of the strategies of governance which they employed. Emphasis is placed on ...the values fostered by the regulations of associations, the complexities of the private-public divide (and that divide's impact on polis institutions) and the dynamics of regional and global networks and group identity. The attested links between rules and religious sanctions also illuminate the relationship between legal history and religion. Moreover, possible links between ancient associations and the early Christian churches will prove particularly valuable for scholars of the New Testament. The book concludes by using the regulations of associations to explore a novel and revealing aspect of the interaction between the Mediterranean world, India and China. This title is also available as Open Access on Cambridge Core.
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