Persistent noise, investors’ expectations, and market meltdowns

Giovanni Cespa, Xavier Vives, 22 April 2014



The recent financial crisis has revived interest in the question of what triggers crashes and meltdowns in financial markets. An important reason for abrupt and large price dislocations is the lack or ‘slow motion’ of arbitrage capital (Duffie 2010) that weakens the risk-bearing capacity of liquidity providers.

Topics: Financial markets
Tags: asset prices, financial crises, informational efficiency, liquidity, noise trading

Recent studies reinforce the case for the Liquidity Coverage Ratio

Stefan W Schmitz, Heiko Hesse, 28 February 2014



With the underpricing of liquidity risk prior to the crisis, a return to the same pre-crisis liquidity pattern is not expected. There is widespread consensus that banks’ extensive pre-crisis reliance on deep and broad unsecured money markets is to be avoided in the future (see e.g. IMF 2013).

Topics: EU institutions, Financial markets
Tags: banking, liquidity

A call for liquidity stress testing and why it should not be neglected

Clemens Bonner, 6 February 2014



The recent financial crisis has shown that neglecting liquidity risks comes at substantial costs. In order to reinforce banks’ resilience to liquidity risks, the Basel Committee on Banking Supervision (BCBS) proposed the introduction of two harmonised liquidity standards:

Topics: Financial markets
Tags: banks, liquidity, stress tests

The determinants of banks’ liquidity buffers and the role of liquidity regulation

Clemens Bonner, Iman van Lelyveld, Robert Zymek, 1 November 2013



Until recently, liquidity risk was not the main focus of banking regulators. However, the 2007–2009 crisis showed how rapidly market conditions can change, exposing severe liquidity risks for some institutions. Although capital buffers were effective in reducing liquidity stress to some extent, they were not always sufficient.

Topics: Financial markets, Microeconomic regulation
Tags: banking, disclosure, liquidity, regulation, Too big to fail, transparency

The impact of liquidity regulation on monetary-policy implementation

Clemens Bonner, Sylvester Eijffinger, 14 October 2013



In response to the recent financial crisis, the Basel Committee on Banking Supervision has drafted a new regulatory framework (henceforth Basel III) with the aim to achieve a more robust banking system. While it also tightens the existing requirements for capital, the proposal stands out as it is the first to attempt harmonised liquidity regulation across the globe.

Topics: Financial markets, Monetary policy
Tags: BASEL III, financial regulation, liquidity, liquidity coverage ratio, monetary policy

Enhancing the global financial safety net through central-bank cooperation

Edwin M. Truman, 10 September 2013



The prospect that the Federal Reserve will soon ease off on its purchases of long-term assets has increased financial-market uncertainty and contributed to a retrenchment in global capital flows. This turbulence has revived discussion of the need to enhance the global financial safety net –i.e.

Topics: Global crisis, International finance
Tags: banking, Central Banks, debt, liquidity

Global factors in capital flows and credit growth

Valentina Bruno, Hyun Song Shin, 7 June 2013



It is a cliché that the world has become more connected, but the financial crisis and the boom that preceded it have focused attention on the global factors behind credit growth and capital flows.

Topics: International finance
Tags: liquidity

Stock market turnover and corporate governance

Alex Edmans, Vivian W Fang, Emanuel Zur, 16 February 2013



The stock market is a powerful tool for controlling corporation’s behaviour. But what is best:

Topics: Financial markets
Tags: corporate governance, financial markets, firms, liquidity, stocks

Basel liquidity rules and their impact on the interbank money market

Clemens Bonner, Sylvester Eijffinger, 13 October 2012



Before the financial crisis in 2008, asset markets were liquid and funding was easily available at low cost.

Topics: Monetary policy
Tags: BASEL III, liquidity, liquidity coverage ratio

2nd MoFiR Workshop on Banking

7 - 8 March 2013, Ancona (Italy)

The aim of the 2nd MoFiR Workshop on Banking is to bring together scholars in banking and finance to discuss the causes, transmission mechanisms, and consequences of the crisis, focusing also on the policy implications for the current situation and the potential reforms. The organizing committee invites the submission of full papers or extended abstracts on the following themes: • Financial sector fragility, contagion, safety nets, and crises; • The (dis-)advantages of cross-border banking; • Liquidity management and provision by financial intermediaries; • Banks’ organizational models, informational asymmetries and distance; • Bank lending, entrepreneurial finance and firm growth; • Experiments in banking.
Andrea F. Presbitero
Ancona (Italy)
Open attendance
Università Politecnica delle Marche and MoFiR
More information:

Disclaimer: Vox is not responsible for the accuracy of this information.

Financial markets, Global crisis, Microeconomic regulation
banking, foreign banks, liquidity, SME lending

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