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

Drug quality and global trade

Amir Attaran, Roger Bate, Ginger Zhe Jin, Aparna Mathur 09 October 2014

a

A

Data from the Pharmaceutical Security Institute indicate that poor-quality medicines were found in 124 countries in 2011, with the problem more severe in low- and mid-income countries than in developed countries (IOM 2013). While much attention has been focused on intellectual property rights protection (notably issues surrounding the WTO’s TRIPS1 agreement), poor-quality samples were more prevalent in cheap, generic drugs than in expensive, innovator-branded drugs when we tested drug samples from 18 low-to-mid-income countries (Bate et al. 2011).

a

A

Topics:  Health economics International trade

Tags:  pharmaceuticals, drugs, medicine, health, trade, drug quality, India, Africa, counterfeiting, regulation, market segmentation

Finance sector wages: explaining their high level and growth

Joanne Lindley, Steven McIntosh 21 September 2014

a

A

Individuals who work in the finance sector enjoy a significant wage advantage. This wage premium has received increasing attention from researchers following the financial crisis, with focus being put onto wages at the top of the distribution in general, and finance sector wages in particular (see Bell and Van Reenen 2010, 2013 for discussion in the UK context). Policymakers have also targeted this wage premium, with the recent implementation of the Capital Requirements Directive capping bankers’ bonuses at a maximum of one year of salary from 2014.

a

A

Topics:  Financial markets Microeconomic regulation

Tags:  Bankers’ bonuses, banking, wages, Inequality, UK, regulation, asymmetric information, Executive compensation, Finance, task-biased technological change, ICT

Compliance with risk targets – will the Volcker Rule be effective?

Jussi Keppo, Josef Korte 07 September 2014

a

A

Full compliance?

The Volcker Rule, passed as part of the Dodd–Frank Act in July 2010, has been appraised as one of the most important changes to banking regulation since the global financial crisis. By restricting banks’ business models and prohibiting allegedly risky activities, the rule ultimately aims at increasing resolvability and reducing imprudent risk-taking by banks, and therefore at increasing financial stability. This is done by banning banks from proprietary trading and limiting their investments in hedge funds and private equity.

a

A

Topics:  Financial markets Microeconomic regulation

Tags:  banking, regulation, Volcker rule, Dodd–Frank, banking regulation, proprietary trading, risk, hedging, financial stability

The impact of capital requirements on bank lending

Jonathan Bridges, David Gregory, Mette Nielsen, Silvia Pezzini, Amar Radia, Marco Spaltro 02 September 2014

a

A

The financial crisis has led to widespread support for greater use of time-varying capital requirements on banks as a macroprudential policy tool (see for example Yellen 2010 and Hanson et al. 2011). Policymakers aim to use these tools to enhance the resilience of the financial system, and, potentially, to curb the credit cycle. Under Basel III, national regulatory authorities will be tasked with setting countercyclical capital buffers over the economic cycle.

a

A

Topics:  Financial markets

Tags:  Macroprudential policy, capital requirements, regulation, bank regulation, BASEL III, Bank of England, financial crisis, bank lending, UK

Service sector regulation and exports: Evidence from Spain

Rafael Doménech, Mónica Correa-López 10 August 2014

a

A

During the crisis, recommendations to improve market functioning in advanced economies have ranked consistently high in the policy portfolio of international institutions (OECD 2014, Buti and Padoan 2013). Among the guidelines, the removal of anti-competitive regulations in the provision of key services that are inputs to other stages of production may be especially relevant to firm performance.

a

A

Topics:  International trade

Tags:  services, regulation, service sector, liberalization

Credit ratings and regulatory risk weights

Harold Cole, Thomas F Cooley 22 June 2014

a

A

One of the casualties of the financial crisis has been the reputation of the major credit rating agencies. To many, the problem with the credit ratings business seems obvious:

  • The ‘issuer-pays’ market structure, in which the issuers pay the agencies to rate their debt instruments, distorts incentives.

The issuers want higher ratings to lower their cost of borrowing, and can shop among raters to get higher ratings (Pagano and Volpin 2010). Seems obvious, right?

a

A

Topics:  Financial markets Global crisis Microeconomic regulation

Tags:  regulation, credit rating agencies, capital requirements, risk weights, sub-prime crisis, reputation

Net neutrality: A simple goal with some difficult implementation ahead

Joshua Gans 11 June 2014

a

A

Net neutrality has a simple goal – to ensure that consumers face an undistorted choice in choosing where to devote their attention on the Internet. The rationale for that goal is to ensure a ‘level playing field’ for those who provide content, applications, or anything else via the Internet.

a

A

Topics:  Competition policy Industrial organisation Microeconomic regulation

Tags:  US, technology, market power, regulation, internet, price discrimination, net neutrality, Federal Communications Commission

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

Pages