scholarly journals From One Stress Test to Another: Lessons for Healthcare Reform from the Financial Sector

2020 ◽  
Vol 11 (4) ◽  
pp. 800-807
Author(s):  
Shirley KEMPENEER
Keyword(s):  
Financial Crisis ◽  
Risk Sharing ◽  
Financial Regulation ◽  
Stress Test ◽  
Banking System ◽  
Healthcare Regulation ◽  
European Healthcare ◽  
European Banking ◽  
European Health ◽  
Europe Today

The financial crisis in 2008 and the COVID-19 pandemic today have made it clear that both financial and medical crises spread pervasively across borders. The financial crisis proved that the health of the entire European banking system stands and falls with the health of a single systemically important bank. As such, in the past decade, European Union (EU)-wide cooperation and regulation have been strengthened to ensure financial health across Europe. Today, the COVID-19 crisis reveals the de facto existence of a European healthcare system, where Member States’ medical health is interlinked and challenged. It too highlights the need for a more coordinated approach. This paper will draw lessons from European financial regulation and stress testing to make recommendations for EU-wide healthcare. The paper will show the latent benefits that a stress test might have on healthcare performance through mechanisms of governmentality. Moreover, it will pinpoint shortcomings in the financial stress test that could pose looming dangers for a European Health Union, such as a lack of de facto risk sharing. The paper concludes with pragmatic suggestions for a way forward in European healthcare regulation.

scholarly journals Using numbers that do not count: how the latent functions of performance indicators explain their success

2019 ◽  
Author(s):  
Shirley Kempeneer ◽  
Wouter Van Dooren
Keyword(s):  
Performance Indicators ◽  
Performance Indicator ◽  
Stress Test ◽  
Banking System ◽  
Performance Outcomes ◽  
Improve Performance ◽  
Risk Regulation ◽  
European Banking ◽  
Performance Results ◽  
Risk Managers

Performance indicators have had to endure severe criticism. They are said to lack accuracy, encourage gaming and ultimately fail to improve performance. Yet, despite their well-documented weaknesses, performance indicators abound in governance. This article asks under which conditions performance indicators can improve performance outcomes, despite these proven weaknesses and dysfunctions. Our case study is the stress test of the European banking system, a high-profile performance indicator used for risk regulation. Based on interviews with risk managers in Belgian banks as well as staff at the European Central Bank, the European Banking Authority and the National Bank of Belgium, we find that the process of calculating the stress test improves performance outcomes in itself. It does so by fostering banks’ capacity to self-regulate, tying into Foucault’s notion of governmentality. As such, practitioners and academics should not only pay attention to how performance results can be used, but also examine how the process of calculating the performance indicator might be designed to improve performance outcomes latently.

scholarly journals A Regulation Model for the Solvency of Banking System: Based on the Pinning Control Theory of Complex Network

2017 ◽  
Vol 2017 ◽  
pp. 1-13 ◽  
Author(s):  
Xiang Gao ◽  
Ming Zhou ◽  
Hongbing Ouyang
Keyword(s):  
Financial Crisis ◽  
Control Theory ◽  
Complex Network ◽  
Stress Test ◽  
Banking System ◽  
Pinning Control ◽  
Regulation System ◽  
Proposed Model ◽  
Regulation Model ◽  
Government Bailouts

A dynamic model is proposed based on the pinning control theory of complex network in order to simulate government bailouts against financial crisis and then is applied to a stress test of China’s interbank borrowing and lending network from 2007 to 2014. The proposed model takes many cases into account, so it is able to simulate bailout effects with different parameters, capture temporal and individual differences of banks’ spillovers effects, and reflect their sensitivity to government bailouts indirectly. This paper offers an innovative model to identify the systemic-important banks in financial crisis and construct a macroprudential regulation system based on network theory.

scholarly journals Evaluating the changes in the European Banking Regulation – MiFID and its possible effects on the Global Economy: A Theoretical Study

2019 ◽  
Vol 3 (4) ◽  
pp. 24-31 ◽  
Author(s):  
S.T. Islam ◽  
M.Y.H. Khan
Keyword(s):  
Financial Crisis ◽  
Financial Management ◽  
Financial Stability ◽  
Global Economy ◽  
Banking System ◽  
Banking Regulation ◽  
Regulatory Framework ◽  
Financial Investment ◽  
European Banking ◽  
The Impact

Banking regulation plays an important role in the process of ensuring financial stability, the national economy, equitable distribution of wealth and the most efficient use of financial resources. As a key regulatory tool, Banking Regulation monitors and monitors financial transactions to improve their profitability and efficiency. The author points out that the main areas of banking regulation and supervision are to control the processes of formation, operation and liquidation of commercial banks. The article focuses on the fact that the 2008 financial crisis has become a motivating driver for reforms in the banking system of Europe and America. The main purpose of the article is to assess the impact of changes in the European Banking System, in particular in the context of the study of the features of the Financial Markets Directive, on the functioning of the global economy. This paper provides a critical review of the literature from the point of view of analyzing the specificity of MiFID II in the context of its impact on the economic aspects of the country’s development. The implementation of the Directive requires significant financial investment, but these costs will pay off given the fact that MiFID II is well-designed and aimed at providing more secure protection and greater customer base stability. However, the author points out the underdevelopment and inconsistency of the regulatory framework, which is of greater concern than the cost of implementing MiFID II. Thus, the idea of the likelihood of financial and economic problems in the process of influence of banking regulation on the development of the global economy is substantiated. Notwithstanding these shortcomings, the regulatory framework for the formulation and implementation of the Directive is a significant contribution to the regulation of the financial sector. The results of the study represent scientific and practical value for academics, politicians, banking financial management of economic entities, stakeholders to better prepare and evaluate future changes as a result of reforming banking regulation. Keywords: Directives, Economic growth, Financial crisis, MiFID, Regulation.

scholarly journals Ownership Structure, Bank Capital and Bank Lending/Financing Behaviour in a Dual Banking System

2019 ◽  
Vol 8 (5C) ◽  
pp. 233-237
Keyword(s):  
Financial Crisis ◽  
Ownership Structure ◽  
Risk Sharing ◽  
Banking System ◽  
Bank Lending ◽  
Islamic Banks ◽  
Bank Capital ◽  
Credit Supply ◽  
Conventional Banks ◽  
The Stability

Credit supply in the market is crucial in order to ensure sustainable real production can survive in the market as well as to strengthen economic activity. Therefore, it is not surprising that when the financial crisis occurred in 2008 to 2009, policymakers continued to use a variety of mechanisms such that banks could continue to maintain their credit supply. Nevertheless, risk sharing based on the business model that was adopted by Islamic banks displayed different behaviour from the conventional banks. Based on prior studies, the stability of financing growth by Islamic banks as compared to lending growth of conventional banks showed the model used by Islamic banks was more capable of effectively withstanding the financial crisis. Therefore, research into the quality of lending and financing is important to understand the growth of bank lending and financing behaviour in the market. Hence, the main objective of this study is to review the effect of ownership structure, bank capital and bank lending including financing behaviour in Islamic versus conventional banks. In addition, this study proposes a conceptual framework to further comprehend the decisions made in undertaking ownership structure, bank capital and lending in the dual banking system.

The Misdiagnosed Debt Crisis

2012 ◽  
Vol 111 (743) ◽  
pp. 83-87
Author(s):  
Daniel Gros
Keyword(s):  
Financial Crisis ◽  
Public Debt ◽  
Debt Crisis ◽  
Banking System ◽  
European Banking

A few nations' public debt problems have become a systemic, area-wide financial crisis because of the fragility of the European banking system.

scholarly journals THE ROLE OF INTEGRATED ISLAMIC COMMERCIAL AND SOCIAL FINANCE FOR CURBING CREDIT CYCLES AND ACHIEVING MACROPRUDENTIAL OBJECTIVE

2018 ◽  
Vol 3 (2) ◽  
pp. 139-180
Author(s):  
Arif Widodo
Keyword(s):  
Financial Crisis ◽  
Financial Stability ◽  
Risk Sharing ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Markov Switching ◽  
Banking System ◽  
Islamic Finance ◽  
Credit Cycles ◽  
Credit Cycle

It is widely believed that Islamic finance is inherently stable since the principle of risk-sharing and linking the financial to real counterpart in particular through its social finance are applied, hence the financial stability may successfully be attained. If mimicking the conventional finance, Islamic model will probably be facing instability, following the financial cycle. There has been a growing literature discussing credit cycle in mainstream perspective since 2008 global financial crash. However, it is quite rare to find study, in macro context, on credit cycles and the effectiveness of integrated Islamic commercial and social finance in achieving macroprudential objective: curtailing excessive credit. This study is designed to empirically examine the characteristics of cycles stemming from conventional and Islamic credit whether both have similar trend and also to investigate how the integrated Islamic commercial and social finance may be effective to hamper such cycles. By employing Hodrick-Presscot Filter, Markov Switching and Vector Error Correction Model, this study demonstrates that, in terms of cycle, Islamic model cycle has certain similarities with conventional counterpart since it functions under similar financial environment despite the fact that Islamic has less amplitude compared with conventional credit. Both credit and financing cycles tend to grow rapidly (excessive) several months before global financial crisis happened in 2008. This means that, in a dual banking system, credit and financing boom may precede financial crisis. Moreover, it is apparent also that the integrated Islamic finance is proven to be effective in curbing credit growth due to the effectiveness of both macroprudential instrument applied in banking sector and social finance in safeguarding financial stability. Keywords:  Credit cycle, Macroprudential policy, Markov Switching, HP filter JEL Classification: E32, E51, G29

scholarly journals COVID-19 as a Stress Test: Assessing the Bank Regulatory Framework

2021 ◽  
Vol 2021 (024) ◽  
pp. 1-47
Author(s):  
Alice Abboud ◽  
◽  
Elizabeth Duncan ◽  
Akos Horvath ◽  
Diana Iercosan ◽  
...  
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Stress Test ◽  
Banking System ◽  
Capital Requirements ◽  
Economic Damage ◽  
Trading Activity ◽  
Regulatory Approach ◽  
Potential Improvement ◽  
The Global Financial Crisis

The widespread economic damage caused by the ongoing COVID-19 pandemic poses the first major test of the bank regulatory reforms put in place following the global financial crisis. This study assesses this framework, with an emphasis on capital and liquidity requirements. Leading up to the COVID-19 crisis, banks were well-capitalized and held ample liquid assets, reflecting in part heightened requirements. Capital requirements were comparable across major jurisdictions, despite differences in the implementation of the international Basel standards. The overall robust capital and liquidity levels resulted in a resilient banking system, which maintained lending through the early stages of the pandemic. Furthermore, trading activity was a source of strength for banks, reflecting in part a prudent regulatory approach. Areas for potential improvement include addressing the cyclicality of requirements.

scholarly journals A Simple Fix for a Complex Problem? Comments on Morgan Ricks, The Money Problem: Rethinking Financial Regulation

2017 ◽  
Vol 8 (2) ◽  
Author(s):  
Margaret M. Blair
Keyword(s):  
Financial Crisis ◽  
Financial Crises ◽  
Financial Regulation ◽  
Banking System ◽  
Complex Problem ◽  
Shadow Banking ◽  
Reform Legislation ◽  
Policy Analysts ◽  
Shadow Banking System ◽  
The U.S

Abstract The financial crisis of 2007–2009 left scholars and policy analysts scrambling to explain what went wrong. While a variety of stories have been told, none have seemed like they could account for the magnitude of the collapse in securities values, or the devastation the collapse caused to the performance of whole economies around the globe, nor could they offer a clear path to reform. Legislation passed to reform the financial system in the U.S. is extraordinarily complex, and still very controversial. Now, however, Morgan Ricks’ new book, The Money Problem: Rethinking Financial Regulation, cuts through the complexity to offer a relatively simple but compelling explanation – the crisis was a consequence of an old-fashioned run on the “bank”, which, in this case, was the shadow banking system rather than regular banks. The solution is the same as the solution that prevented major financial crises in the U.S. from the 1930s to 2007 – government insurance of “money claims” and stricter regulation of firms that are allowed to issue money-like claims.

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