Issues of banking stability are currently intensively debated in Germany and elsewhere. This column looks at German banks and suggests that privately-owned banks are more profitable and better capitalised than savings and cooperative banks, but also take more risk. This higher risk taking results in higher default probability and higher “proximity to insolvency” of privately-owned banks.
Thorsten Beck, Heiko Hesse, Thomas Kick, Natalja von Westernhagen , Saturday, May 9, 2009 - 00:00
Daniel Gros, Friday, May 1, 2009 - 00:00
Today’s general consensus is that a key factor behind the Great Depression was the breakdown of the US banking system and that we must avoid large-scale bank failures this time around at all costs. However, this column shows that commercial banks actually do relatively well during recessions. It is the financial sector outside banking – in other words, investment banking – that suffers huge losses.
Viral Acharya, Hyun Song Shin, Irvind Gujral, Tuesday, March 31, 2009 - 00:00
Banks’ corporate governance is under fire. Perhaps one of the worst failures of governance has been the continued payment of dividends throughout the financial crisis. This column says that dividends’ erosion of common equity deprived banks of capital when they most needed it. It proposes cutting dividends as the first step in the resolution of future banking crises.
Esther Duflo, Friday, March 6, 2009 - 00:00
This column warns against bank nationalisation without state control. Bankers will not hesitate to enrich themselves at the expense of the public good if they have the opportunity.
Thomas Gehrig, Lukas Menkhoff, Monday, March 2, 2009 - 00:00
Bonuses are seen as drivers of greed, irresponsibly, and short-sighted behaviour. This column discusses the research on how bonuses affect bankers’ behaviour. It argues that bonuses are a valuable tool for guiding managers to do what’s right for corporations and even society. The debate should be about performance criteria and sustainable goals, not the size of bonus payments.