Found 15 article(s) for author 'Banking'

Strengthening and Streamlining Bank Capital Regulation

Strengthening and Streamlining Bank Capital Regulation. Robin Greenwood, Samuel Hanson, Jeremy Stein, Adi Sunderam, August 2017, Paper, “We propose three core principles that should inform the design of bank capital regulation. First, wherever possible, multiple constraints on the minimum level of equity capital should be consolidated into a single constraint. This helps to avoid a distortionary situation where different constraints bind for different banks performing the same activity. Second, while a regulatory framework that relies primarily on minimum capital ratios is appropriate for normal times, such a framework is inadequate in the wake of a large negative shock to the system. Following an adverse shock, it becomes critical to emphasize dynamic resilience, which involves forcing banks to actively recapitalize—i.e. regulation needs to focus on getting banks to raise new dollars of equity capital, rather than just maintaining their capital ratios.Link

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The Fed’s Next Big Set of Challenges

The Fed’s Next Big Set of Challenges. Lawrence Summers, August 25, 2017, Opinion, “I will not be attending Jackson Hole this year but I will be thinking about some of the issues under discussion. As I have written recently, I think the period going forward will be more challenging for central banks than the preceding few years. I will sleep best at night if Janet Yellen is reappointed.Link

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Research: Hiring Chief Risk Officers Led Banks to Take on Even More Risk

Research: Hiring Chief Risk Officers Led Banks to Take on Even More Risk. Frank Dobbin, July 12, 2017, “Risk taking by big U.S. banks exploded in the years leading up to the 2008 financial crisis, with disastrous consequences for American firms, markets, and households. Much of the added risk, of course, came in the form of complex, opaque financial instruments like derivatives, the “financial weapons of mass destruction” that played such a central role in the crisis and the panic that followed.Link

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Walmart Tries to Make Better Savers out of the Unbanked

Walmart Tries to Make Better Savers out of the Unbanked. Brigitte Madrian, July 7, 2017, Audio, “Jamie Aronton doesn’t have a bank account. Instead, she uses Money Mart, a check cashing spot in Pittsburgh, to direct deposit her salary onto prepaid debit cards. She makes $12-an-hour in a housekeeping job and said that by the time her deposits come through her cards are pretty tapped out.Link

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The Trump administration—not the Fed—has it right on bank regulation

The Trump administration—not the Fed—has it right on bank regulation. Hal Scott, July 3, 2017, Opinion, “All 34 of the largest banks in the United States, representing over 75 percent of U.S. banking assets, recently passed the Federal Reserve Board’s annual stress tests for the first time since the tests were created in 2011. However, celebration is very premature.Link

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The Decline of Big-Bank Lending to Small Business: Dynamic Impacts on Local Credit and Labor Markets

The Decline of Big-Bank Lending to Small Business: Dynamic Impacts on Local Credit and Labor Markets. Samuel Hanson, Jeremy Stein, March 2017, Paper, “Small business lending by the four largest U.S. banks fell sharply relative to other banks beginning in 2008 and remained depressed through 2014. We explore the consequences of this credit supply shock, with a particular focus on the resulting dynamic adjustment process. Using a difference-indifference approach that compares counties where the Top 4 banks had a higher initial market share to counties where they had a smaller share, we find that the aggregate flow of small business credit fell and interest rates rose from 2006 to 2010 in high Top 4 counties. Economic activity also contracted in these affected counties: fewer businesses expanded employment, the unemployment rate rose, and wages fell. Moreover, the employment effects were concentrated in industries that are most reliant on external finance, such as manufacturing.Link

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Harvard’s Scott Says U.S. Has Latitude on Bank Reforms

Harvard’s Scott Says U.S. Has Latitude on Bank Reforms. Hal Scott, March 23, 2017, Video, “Hal Scott, Harvard Law School professor and president of Committee on Capital Markets Regulation, discusses the Trump administration’s approach to financial regulation and how it relates to the Federal Reserve and monetary policy. Scott is a potential candidate to be the next Vice Chair of the Federal Reserve. He speaks on “Bloomberg Surveillance.”Link

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The Financial Regulatory Reform Agenda in 2017

The Financial Regulatory Reform Agenda in 2017. Robin Greenwood, Samuel Hanson, Jeremy Stein, Adi Sunderam, February 2017, Paper, “We take stock of the post-crisis financial regulatory reform agenda. We highlight and summarize areas of clear progress, where post-crisis reforms should either be maintained or built upon. We then identify several areas where the new regulations could be streamlined or rolled back in an effort to reduce the burden on the financial sector, particularly on smaller banks.Link

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Private Banking and Crony Capitalism in Egypt

Private Banking and Crony Capitalism in Egypt. Ishac Diwan, 2016, Paper, “In Egypt, the bulk of bank loans during 2003-2010 went to politically connected firms. At the same time, the banking sector was liberalized increasingly operated around competitive and profit-maximizing principles. A key puzzle that the paper tries to answer is why private banks may lend in preferential ways to politically connected firms (PCFs) in such an environment. Using a rich corporate dataset, we find that politically connected firms did not have higher profitability compared to non-politically connected firms. This suggests that PCFs were perceived to have lower risk. Indeed, we find evidence that this was the case, and that lower risk reflected higher access to bailout guarantees (implicit or explicit), as happened in earlier periods, and/or higher perceived growth opportunities.Link

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