Benchmarking the European Central Bank's asset quality review and stress test: A tale of two leverage ratios

Viral Acharya, Sascha Steffen 21 November 2014

a

A

In November 2014, the ECB published its asset quality review (AQR) and comprehensive assessment (ECB 2014), as well as capital shortfall estimates based on its stress test.  These results differed widely from our earlier assessment (Acharya and Steffen 2014). Indeed, the two shortfall estimates are negatively correlated.

a

A

Topics:  Europe's nations and regions Financial markets Monetary policy

Tags:  systemic risk, ECB. banking supervision, capital shortfalls

The butterfly defect: How to manage systemic risk

Ian Goldin interviewed by Romesh Vaitilingam,

Date Published

Fri, 11/21/2014

a

A

See Also

Goldin, Ian and Mike Mariathasan (2014), The Butterfly Defect: How Globalization Creates Systemic Risks, and What to Do about It, Princeton University Press.

a

A

Topics

Financial markets Global economy Global governance
Tags
financial institutions, globalisation, systemic risk

Date Weighting

-1

Related Article(s)

Designing a systemic risk warning system Measuring systemic risk and the dismal failure of Basel risk weights Foreign-currency loans and systemic risk in Europe Ensuring globalisation after the global crisis Did financial globalisation make the US crisis worse?
MP3 File Details

Listen

Unfortunately the file could not be found.

Open in a pop-up window Open in a pop-up window

Download

Download MP3 File (11.3MB)

MP3 File Size

11.3MB

MP3 RSS File Size

11855693

MP3 Length (Minutes)

12

MP3 Length (Seconds)

20

When

September 2014

Making sense of the comprehensive assessment

Viral Acharya, Sascha Steffen 29 October 2014

a

A

Motivation

The ECB has finalised its assessment of the largest banks in the Eurozone before it commences their regulatory oversight in November 2014. It has now disclosed its own assessment about the solvency of the banking sector (ECB 2014).

a

A

Topics:  Europe's nations and regions Financial markets Monetary policy

Tags:  systemic risk, ECB. banking supervision, capital shortfalls

How insurers differ from banks: Implications for systemic regulation

Christian Thimann 17 October 2014

a

A

Regulation of the insurance industry is entering a new era. The global regulatory community under the auspices of the Financial Stability Board (FSB) is contemplating regulatory standards for insurance groups that it deems to be of systemic importance. Nine insurance groups received this FSB classification in 2013, and the design of systemic regulation for these groups is now in progress.

a

A

Topics:  Financial markets

Tags:  insurance, reinsurance, banking, financial intermediation, regulation, systemic risk, maturity transformation, BASEL III, investment, capital, capital requirements, bail-in, loss absorption

Regulating the global insurance industry: Motivations and challenges

Christian Thimann 10 October 2014

a

A

The Financial Stability Board (FSB) has completed its framework for the regulation of systemically important banks (FSB 2013a), and is now turning to the insurance industry. Its approach is inspired by the banking framework, under which 29 banking groups have been classified as systemically important. These banks are subject to a three-pronged framework consisting of enhanced supervision, the preparation of risk- and crisis-management plans, and the application of capital surcharges.

a

A

Topics:  Financial markets Global crisis

Tags:  systemic risk, insurance, global crisis, AIG, regulation, capital requirements, Bailouts, bail-in, financial intermediation, accounting standards, mark-to-market, risk management

Systemic risk in Europe: Too big to save

Robert Engle, Eric Jondeau, Michael Rockinger 20 September 2014

a

A

The Global Financial Stability Report of the IMF (2009) defines systemic risk as “a risk of disruption to financial services that is caused by an impairment of all or parts of the financial system and that has the potential to cause serious negative consequences for the real economy”. With the recent financial crisis, interest in the concept of systemic risk has grown. The rising globalisation of financial services has strengthened the interconnection between financial institutions.

a

A

Topics:  Global economy International finance

Tags:  systemic risk

Corporate governance of banks and financial stability

Luc Laeven, Lev Ratnovski 21 July 2014

a

A

Corporate governance is the practice of shareholders exercising control over managers so that they act in shareholders’ interests. In non-financial firms, this maximises firm efficiency. Such efficiency effects also exist in banks. For example, banks that face more active takeover markets are more cost-efficient (Brook et al. 1998).

Unlike non-financial firms, bank operations have another relevant dimension besides efficiency: risk. Banks are prone to risk-taking, due to:

a

A

Topics:  Financial markets

Tags:  corporate governance, bank regulation, systemic risk

Are banks too large?

Lev Ratnovski, Luc Laeven, Hui Tong 31 May 2014

a

A

Large banks have grown significantly in size and become more involved in market-based activities since the late 1990s. Figure 1 shows how the balance-sheet size of the world’s largest banks increased two- to four-fold in the ten years prior to the crisis. Figure 2 illustrates how banks shifted from traditional lending towards market-oriented activities.

a

A

Topics:  Financial markets

Tags:  regulation, economies of scale, bank regulation, banking, Too big to fail, systemic risk, BASEL III, bank resolution, bank capital

Spillovers from systemic bank defaults

Mark Mink, Jakob de Haan 24 May 2014

a

A

Financial-crisis management and prevention policies often focus on mitigating spillovers from the default of systemically important banks. During the recent crisis, governments avoided large bank failures by insuring and purchasing intermediaries’ troubled assets, by providing them with capital injections, and even by outright nationalisations. After the crisis, financial regulators designed additional requirements for those institutions that the Financial Stability Board designated as globally systemically important banks (G-SIBs).

a

A

Topics:  Financial markets

Tags:  financial stability, spillovers, regulation, banking, banks, systemic risk

Exploring the transmission channels of contagious bank runs

Martin Brown, Stefan Trautmann, Razvan Vlahu 10 April 2014

a

A

Financial contagion – the situation in which liquidity or insolvency risk is transmitted from one financial institution to another – is viewed by policymakers and academics as a key source of systemic risk in the banking sector. In particular, the events in the 2007–2009 Global Crisis have turned the attention of policymakers towards the potential contagion of liquidity withdrawals across banks and the resulting implications for financial stability.

a

A

Topics:  Financial markets

Tags:  experimental economics, financial stability, financial crisis, global crisis, banking, contagion, banks, systemic risk, bank runs

Pages

Events