The Crisis Aftermath: New Regulatory Paradigms

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Fri, 03/30/2012

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The Crisis Aftermath: New Regulatory Paradigms

Edited by Mathias Dewatripont and Xavier Freixas

30 March 2012

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Tags
risk-taking, financial regulation, Eurozone crisis, PEGGED

A new eReport: Excessive risk-taking by banks

Richard Baldwin 30 March 2012

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For many, the global crisis was caused by the interlinked fragilities that arose in the banking and financial sectors; these themselves were created by mindless deregulation and permissive monetary policy. By the late 2000s, the system was so precarious that shocks from many directions could have triggered the economic conflagration we witnessed.

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Topics:  Global crisis Global economy Microeconomic regulation

Tags:  risk-taking, cross-border banking, macroprudential regulation

Loose monetary policy and excessive credit and liquidity risk-taking by banks

Steven Ongena, José-Luis Peydró 25 October 2011

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A question under intense academic and policy debate since the start of the ongoing severe financial crisis is whether a low monetary-policy rate spurs excessive risk-taking by banks. From the start of the crisis in the summer of 2007, market commentators were quick to argue that, during the long period of very low interest rates from 2002 to 2005, banks had softened their lending standards and taken on excessive risk.

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Topics:  International finance Monetary policy

Tags:  interest rates, monetary policy, risk-taking, subprime loans

Do banks learn from crises?

Ruediger Fahlenbrach, Robert Prilmeier, René M Stulz 27 May 2011

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On 17 August 1998, Russia defaulted on its debt. This event started a dramatic chain reaction. As one observer put it, “the entire global economic system as we know it almost went into meltdown, beginning with Russia's default” (Friedman 1999). As Russia defaulted, a number of investors, including banks, made large losses. For example, the market capitalisation of both CitiGroup and Chase Manhattan fell by approximately 50% in the two months following the Russian default. 

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Topics:  Global crisis International trade

Tags:  Russia, risk-taking, financial crises, banks

The bright side of bonuses

Thomas Gehrig, Lukas Menkhoff 02 March 2009

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At the height of the financial crisis, it has become popular to blame bonuses as the main culprit, luring top bankers into socially wasteful investments. Bonuses are readily seen as the main drivers of greed and irresponsibly short-sighted behaviour.

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Topics:  Financial markets Labour markets

Tags:  risk-taking, compensation, bonuses, banks

‘Depression babies’: do macroeconomic experiences affect risk-taking?

Ulrike Malmendier interviewed by Romesh Vaitilingam,

Date Published

Fri, 08/08/2008

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Topics

Financial markets
Tags
risk-taking, economic fluctuations
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The impact of short-term interest rates on risk-taking: hard evidence

Vasso P. Ioannidou, Steven Ongena, José-Luis Peydró 17 October 2007

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In the heat of the summer turmoil in the global financial markets, observers immediately argued that the low levels of short-term interest rates during the 2002-2005 period created the conditions for excessive risk-taking and were consequently one of the main causes of these almost unprecedented credit market convulsions.1,2 Despite the theoretical appeal and wide-spread resonance of this contention,3 no detailed empirical evidence — as far as we are aware — has established a clear and direct link from monetary

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Topics:  Financial markets

Tags:  monetary policy, Subprime, subprime crisis, short-term interest rates, risk-taking, credit risk

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