Bank business models, regulation, and the role of financial market participants in the global financial crisis☆

Abstract

The recent financial crisis shone a spotlight on several key issues: bank regulation; bank models; and the relationship between traditional banking, the interbank markets and the markets for complex financial derivatives. Indeed, the role that derivatives such as Credit Default Swaps and Collateralised Debt Obligations played in the credit bubble and the subsequent credit crunch may appear to have made this financial crisis unique. However, the fundamental cause of this crisis, which led directly to the worst global recession since the 1930s, is all too familiar: ultimately, too much money was lent to too many people who could not afford to pay it back. It was a classic bank crisis of over lending, but this time on a global scale.

Between Prudential Regulation and Shareholder Value: An Empirical Perspective on Bank Shareholder Equity (2001-2017)

“…Bank regulatory capital is seen as the core measure of financial stability of banks; the main initiative of regulators after the financial crisis was to increase the quantity and quality of bank capital (Clare, Duygun, Azzim Gulamhussen, & Pozzolo, 2016;Duffie, 2018). Studies capture the development of regulatory capital pre-and post-crisis.…”

Credit risk, owner liability, and bank loan maturities during the global financial crisis

“…None of the studies in the United States and Europe look at bank loan maturities during the global financial crisis, which is widely acknowledged as a unique laboratorial context to test finance theories (Abreu & Gulamhussen, ) and inform post‐crisis reforms (Clare, Fethi, Gulamhussen, & Pozzolo, ). We aim to fill this gap with this paper.…”