scholarly journals Bank Networks and Systemic Risk: Evidence from the National Banking Acts

2019 ◽  
Vol 109 (9) ◽  
pp. 3125-3161 ◽  
Author(s):  
Haelim Anderson ◽  
Mark Paddrik ◽  
Jessie Jiaxu Wang
Keyword(s):  
Network Model ◽  
Network Structure ◽  
Systemic Risk ◽  
Financial Stability ◽  
Balance Sheets ◽  
Unique Data ◽  
Financial Center ◽  
Bank Balance Sheets ◽  
The City ◽  
Systemically Important Banks

The National Banking Acts (NBAs) of 1863–1864 established rules governing the amounts and locations of interbank deposits, thereby reshaping the bank networks. Using unique data on bank balance sheets and detailed interbank deposits in 1862 and 1867 in Pennsylvania, we study how the NBAs changed the network structure and quantify the effect on financial stability in an interbank network model. We find that the NBAs induced a concentration of interbank deposits at both the city and bank levels, creating systemically important banks. Although the concentration facilitated diversification, contagion would have become more likely when financial center banks faced large shocks. (JEL E44, G01, G21, G28, L14, N21)

Reforming the Regulatory Treatment of Sovereign Exposures in Banking Regulation

2020 ◽  
Vol 53 (1) ◽  
pp. 81-122
Author(s):  
André Sterzel
Keyword(s):  
Financial Stability ◽  
Sovereign Debt ◽  
Debt Crisis ◽  
Banking Regulation ◽  
Jel Classification ◽  
Bank Capital ◽  
Exposure Limits ◽  
Government Bonds ◽  
Balance Sheets ◽  
Bank Balance Sheets

Abstract The European sovereign debt crisis has shown the tight linkage between sovereign and bank balance sheets. In the aftermath of the crisis, several reforms have been discussed in order to mitigate the sovereign-bank nexus. These reforms include the abolishment of preferential government bond treatment in banking regulation. This paper gives a detailed overview of literature and data which are closely related to the existing preferential sovereign bond treatment in bank regulation and highlights the need for reforms especially in the euro area. Against this background, the following three regulatory reforms are described and discussed: (i) positive risk weights for government bonds in bank capital regulation, (ii) sovereign exposure limits, and (iii) haircuts for government bonds in bank liquidity regulation. The discussion focusses on the effects of these reforms for bank behaviour and financial stability. JEL Classification: H63, H12, G11, G18

scholarly journals Conventional Monetary Policy

2021 ◽  
pp. 29-51
Author(s):  
Ulrich Bindseil ◽  
Alessio Fotia
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Interest Rates ◽  
Financial Stability ◽  
Balance Sheet ◽  
Central Banks ◽  
Control Measures ◽  
Short Term ◽  
Balance Sheets ◽  
Bank Balance Sheets

AbstractThis chapter introduces conventional monetary policy, i.e. monetary policy during periods of economic and financial stability and when short-term interest rates are not constrained by the zero lower bound. We introduce the concept of an operational target of monetary policy and explain why central banks normally give this role to the short-term interbank rate. We briefly touch macroeconomics by outlining how central banks should set interest rates across time to achieve their ultimate target, e.g. price stability, and we acknowledge the complications in doing so. We then zoom further into monetary policy operations and central bank balance sheets by developing the concepts of autonomous factor, monetary policy instruments, and liquidity-absorbing and liquidity providing balance sheet items. Subsequently we explain how these quantities relate to short-term interest rates, and how the central bank can rely on this relation to steer its operational target, and thereby the starting point of monetary policy transmission. Finally, we explain the importance of the collateral framework and related risk control measures (e.g. haircuts) for the liquidity of banks and for the conduct of central bank credit operations.

ANALYSIS OF SYSTEMATICALLY IMPORTANT BANKS OF UKRAINE

2017 ◽  
Author(s):  
Rita Korolenko ◽  
◽  
Iryna Ukhova ◽  
Keyword(s):  
Financial Stability ◽  
Banking Sector ◽  
State Level ◽  
Bank Lending ◽  
Balance Sheets ◽  
Loan Portfolios ◽  
Systemic Risks ◽  
Banking Institutions ◽  
Systemically Important Banks ◽  
Authorized Capital

The article considers the key performance indicators of systemically important banks of Ukraine, which are the main players in the banking sector of Ukraine. It is established the contribution of SIB to the domestic BSU is 82,45% of assets, 83,77% of liabilities, 73,36% of equity, 86,14% of profit of BSU in 2019. Emphasis is placed on the fact that the BSU has a law «80-20, 20-80»: 14 SIBU (18,67%) of system participants generates 82,45% of the resources of the entire BSU. These financial institutions have a significant impact on the overall result of the BSU and they are systemically important. The problems of functioning of domestic systemically important banks are considered and it is revealed that these institutions have similar problems, which can be defined as follows: slowdown of bank lending of systemically important banks of Ukraine; a significant share of bad debts on the balance sheets; imbalance of the indicator «loans-deposits» (LDR); tendency of low values of profitability of deposits of systemically important banks of Ukraine; the share of the authorized capital of SIB exceeds 60% of the own capital (unprofitable activity of banks due to excessive amount of toxic loans, dependence on owners' funds); nationalization of the banking sector and inefficient management of state SIB. General recommendations are provided for solving these problems: it is necessary to ensure changes in the legislative field of regulation of banks of this group at the state level (for example, the NBU's introduction of monthly financial stability reporting) and improve the management of the banking institutions themselves (for example, optimize loan portfolios, form a strategy for managing systemic risks before the onset of the crisis, the implementation of the «sports interest» method to deal with problem debts).

scholarly journals Greece

2019 ◽  
Vol 19 (340) ◽  
Author(s):  
Keyword(s):  
Public Debt ◽  
Financial Stability ◽  
Structural Policy ◽  
Balance Sheets ◽  
Program Monitoring ◽  
European Institutions ◽  
Vested Interests ◽  
Growth Prospects ◽  
Bank Balance Sheets

Greece’s economic recovery continues, but it has fallen far short of expectations. The new government elected in July has pledged to follow pro-growth policies while honoring fiscal and structural policy commitments to Euro Area (EA) member states, but its ability to overcome vested interests has yet to be tested. Public debt is projected to trend down over the next decade, though long-term sustainability is not assured under realistic macro-fiscal assumptions. Still-weak bank balance sheets act as a drag on growth prospects and pose significant fiscal and financial stability risks. These and other factors leave Greece vulnerable to a range of external and domestic shocks. Greece owes the Fund SDR 6.7 billion and is under Post-Program Monitoring (PPM). The authorities have asked the European Institutions (EIs) for approval to prepay the portion (SDR 2.2 billion) that is subject to surcharges.

Macroprudential Policy Instruments of Central Banks

2012 ◽  
pp. 32-47
Author(s):  
S. Andryushin ◽  
V. Kuznetsova
Keyword(s):  
Systemic Risk ◽  
Financial Stability ◽  
Financial System ◽  
Policy Instruments ◽  
Central Banks ◽  
Macroprudential Policy ◽  
Policy Studies ◽  
The Future ◽  
Financial Cycles

The paper analyzes central banks macroprudencial policy and its instruments. The issues of their classification, option, design and adjustment are connected with financial stability of overall financial system and its specific institutions. The macroprudencial instruments effectiveness is evaluated from the two points: how they mitigate temporal and intersectoral systemic risk development (market, credit, and operational). The future macroprudentional policy studies directions are noted to identify the instruments, which can be used to limit the financial systemdevelopment procyclicality, mitigate the credit and financial cycles volatility.

scholarly journals Values-Based and Global Systemically Important Banks: Their Stability and the Impact of Regulatory Changes After the Financial Crisis on it

2021 ◽  
Author(s):  
Theresa Schäfer ◽  
Sebastian Utz
Keyword(s):  
Financial Crisis ◽  
Financial Stability ◽  
Social Impact ◽  
Bank Stability ◽  
Regulatory Changes ◽  
The Difference ◽  
The Impact ◽  
Systemically Important Banks

AbstractWe study the financial stability of Values-Based Banks (VBBs) and Global Systemically Important Banks (GSIBs), and how regulatory changes in the aftermath of the financial crisis affected bank stability. These two types of banks allow contrasting an environmental and social impact banking approach to a conventional one. VBBs exhibit significantly higher financial stability before and during the financial crisis. However, regulatory changes in the aftermath of the financial crisis requiring higher capital buffer, have significantly affected GSIBs and rendered the difference in stability levels insignificant.

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