The Future Of Large, Internationally Active Banks

The Future Of Large, Internationally Active Banks PDF

Author: Asli Demirguc-kunt

Publisher: World Scientific

Published: 2016-09-16

Total Pages: 494

ISBN-13: 9813141409

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The Great Financial Crisis of 2007-2010 has had a major impact on large cross-border banks, which are widely blamed for the start and severity of the crisis. As a result, much public policy, both in the United States and elsewhere, has been directed at making these banks safer and less influential by reducing their size and permissible powers through increased government regulation.At the Federal Reserve Bank of Chicago's 18th annual International Banking Conference, held in November 2015, the status of these large cross-border banks was critically evaluated. In collaboration with the World Bank, the conference held discussions on the current regulatory landscape for large and internationally active financial institutions; the impact of regulation on bank permissible activities and international trade; improvements in risk management; necessary repairs to the bank safety net; the resolution of insolvent banks operating across national borders; corporate governance for banks in the new environment; implications for market and government discipline; and, progress in achieving international cooperation.Contributors include international policymakers, practitioners, researchers, and academics from more than 30 countries. The papers from the conference are collected in this volume.

The Future of Large, Internationally Active Banks

The Future of Large, Internationally Active Banks PDF

Author: Joseph P. Hughes

Publisher:

Published: 2016

Total Pages: 22

ISBN-13:

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Our research as well as that by other authors has found scale economies at all sizes of banks and the largest scale economies at the largest banks - that is, larger banks are able to provide products at lower average cost than smaller banks. While the earlier literature found that scale economies are exhausted beyond a modest size - no larger than $100 billion and usually much smaller - a number of recent studies have found scale economies beyond this point, in fact, economies that increase with size. Based on a model that appropriately accounts for endogenous risk-taking and controls for any cost-of-funding advantages conferred on large banks, we find that technological factors, not advantages in funding costs, account for their scale economies. The literature does not indicate whether these benefits of larger size outweigh the potential costs in terms of systemic risk that large scale may impose on the financial system. However, if public policy considerations imply that society would be better off with smaller financial institutions, restrictions that limit the size of financial institutions, if effective, may put large banks at a competitive disadvantage in global markets where competitors are not similarly constrained. Moreover, size restrictions may not be effective since they work against market forces and create incentives for firms to avoid them. Avoiding the restrictions could thereby push risk-taking outside of the more regulated financial sector without necessarily reducing systemic risk. If such limits were imposed, intensive monitoring for such risks would be required. These factors need to be considered when evaluating policies concerning financial institution scale.

Bank Size and Systemic Risk

Bank Size and Systemic Risk PDF

Author: Mr.Luc Laeven

Publisher: International Monetary Fund

Published: 2014-05-08

Total Pages: 34

ISBN-13: 1484363728

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The proposed SDN documents the evolution of bank size and activities over the past 20 years. It discusses whether this evolution can be explained by economies of scale or “too big to fail” subsidies. The paper then presents evidence on the extent to which bank size and market-based activities contribute to systemic risk. The paper concludes with policy messages in the area of capital regulation and activity restrictions to reduce the systemic risk posed by large banks. The analysis of the paper complements earlier Fund work, including SDN 13/04 and the recent GFSR chapter on “too big to fail” subsidies, and its policy message is in line with this earlier work.

Cross-border Banking

Cross-border Banking PDF

Author: Gerard Caprio

Publisher: World Scientific

Published: 2006

Total Pages: 491

ISBN-13: 9812568298

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Cross-border banking, while having the potential for a more efficient financial sector, also creates potential challenges for bank supervisors and regulators. This volume discusses topics that include: the landscape of cross-border bank activity, the resulting competitive implications, emerging challenges for prudential regulation, and more. Cross-border banking, while having the potential for a more efficient financial sector, also creates potential challenges for bank supervisors and regulators. It requires cooperation by regulatory authorities across jurisdictions and a clear delineation of authority and responsibility. That delineation is typically not present and regulatory authorities often have significantly different incentives to respond when cross-border-active banks encounter difficulties. Most of these issues have only begun to be seriously evaluated. This volume, one of the first attempts to address these issues, brings together experts and regulators from different countries. The wide range of topics discussed include: the current landscape of cross-border bank activity, the resulting competitive implications, emerging challenges for prudential regulation, safety net concerns, failure resolution issues, and the potential future evolution of international banking.

Basel III

Basel III PDF

Author: Andreas R. Dombret

Publisher: Institute for Law and Finance Series

Published: 2019

Total Pages: 0

ISBN-13: 9783110619737

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On December 7, 2017, final agreement was reached on the long-awaited revised bank capital rules known as Basel III. This volume presents the findings of day long symposium hosted by the Institute for Law and Finance on January 29, 2018, dedicated to explaining what has actually been accomplished, what has been left out and what it all means for financial institutions, investors and the public interest.

Lessons of the Financial Crisis for Future Regulation of Financial Institutions and Markets and for Liquidity Management

Lessons of the Financial Crisis for Future Regulation of Financial Institutions and Markets and for Liquidity Management PDF

Author: International Monetary Fund. Monetary and Capital Markets Department

Publisher: International Monetary Fund

Published: 2009-04-02

Total Pages: 28

ISBN-13: 149833637X

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This paper seeks to draw lessons for financial sector regulation and supervision and central bank liquidity management from the ongoing crisis, focusing principally on implications for the future rather than on immediate crisis management policies. Inadequacies in macroeconomic policies and the design of the international financial architecture exposed in the crisis will also have to be addressed to make the suggested changes in the regulatory framework effective.

Banking in a Changing World

Banking in a Changing World PDF

Author: Michael Krimminger

Publisher:

Published: 2005

Total Pages: 30

ISBN-13:

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The globalization of finance has led to the development of more integrated global exchange networks among countries and deeper interrelationships between their economies. Many financial institutions and activities that once were local are now international. While business and finance are global most regulatory systems and laws are not. Many of the regulatory and legal norms that govern these networks and interrelationships have not kept pace with these innovations. There are few international rules and norms to govern the linkages between financial institutions, payments systems, and markets. National laws almost exclusively define the relationships between internationally active banks and other financial institutions. The real task of the future is to develop regulatory and legal norms that allow the benefits of increased global interaction to blossom while mitigating the more troubling consequences of global finance. This paper focuses on the challenges faced by national authorities in responding to financial instability in a cross-border bank. The paper identifies the issues created both for home countries of large cross-border banks and for host countries for such banks. While the host countries face daunting challenges, home countries must respond as well to difficult policy questions. In the absence of a common international insolvency system for cross-border banks, national authorities must improve their understanding of the options available and improve coordination with other regulators if they are to be successful in limiting the consequences of a potential cross-border failure. Both legal changes and fresh approaches to international coordination and decision-making may be required to respond to the reality of cross-border banking.

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