International Alignment of Financial Sector Regulation

Acharya, Viral V.; Wachtel, Paul L.; Walter, Ingo

doi:10.1002/9781118258163.ch18

Cited by 13 publications

(6 citation statements)

References 3 publications

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“…We use the creditor rights index first established by La Porta et al (1998; LLSV henceforth) as a measure of the powers of secured creditors in bankruptcy. The index has been widely used in recent studies in finance literature (e.g., Houston et al (2010), Acharya, Amihud, and Litov (2011)). The level of information sharing among creditors is also likely to have an important influence on banks’ willingness to provide foreign capital.…”

Section: Data and Summary Statisticsmentioning

confidence: 99%

“…2 2 Reflecting these concerns about regulatory arbitrage, Acharya, Wachtel, and Walter (2009, p. 370) argue “This will end up conferring substantial guarantees to the financial sector, giving rise to excessive leverage and risk taking incentives in spite of substantial regulation in each country.” Echoing these concerns, Naoyuki Shinohara, the IMF's Deputy Managing Director, stated that “It is important to ensure a level playing field in regulation. Global coordination is needed to reap the benefits of global finance while minimizing the scope for regulatory arbitrage, which could be damaging to global financial stability” (“Panel Discussion on Global Financial and Economic Governance,” World Capital Markets Symposium, Kuala Lumpur, September 27, 2010). …”

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confidence: 99%

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Regulatory Arbitrage and International Bank Flows

Houston¹,

Lin²,

2012

The Journal of Finance

302

187

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We study whether cross‐country differences in regulations have affected international bank flows. We find strong evidence that banks have transferred funds to markets with fewer regulations. This form of regulatory arbitrage suggests there may be a destructive “race to the bottom” in global regulations, which restricts domestic regulators’ ability to limit bank risk‐taking. However, we also find that the links between regulation differences and bank flows are significantly stronger if the recipient country is a developed country with strong property rights and creditor rights. This suggests that, while differences in regulations have important influences, without a strong institutional environment, lax regulations are not enough to encourage massive capital flows.

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Section: Data and Summary Statisticsmentioning

confidence: 99%

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confidence: 99%

Regulatory Arbitrage and International Bank Flows

Houston¹,

Lin²,

2012

The Journal of Finance

302

187

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“…The ecologist Robert May has been a strong advocate of the application of complex systems analysis to the study of …nancial networks. 5 Over the last 10 years, many researchers have followed this promising line of research by using these analytical tools to improve our understanding of the …nancial sector in general and banking systems in particular. 6 In this paper, we review this new and fast growing literature paying special attention to issues related to the measurement of systemic risk.…”

Section: Introductionmentioning

confidence: 99%

“…4 See Allen and Babus (2009) for a review of various applications of network theory to the study of …nancial issues. 5 See, for example, Haldane and May (2011) and May and Sugihara (2008). For a similar perspective on the bene…ts of network analysis, see also Schweitzer et al (2009).…”

Section: Introductionmentioning

confidence: 99%

Complex Financial Networks and Systemic Risk: A Review

Bougheas

Kirman

2015

Dynamic Modeling and Econometrics in Economics and Finance

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. In this paper we review recent advances in financial economics in relation to the measurement of systemic risk. We start by reviewing studies that apply traditional measures of risk to financial institutions. However, the main focus of the review is on studies that use network analysis paying special attention to those that apply complex analysis techniques. Applications of these techniques for the analysis and pricing of systemic risk has already provided significant benefits at least at the conceptual level but it also looks very promising from a practical point of view. Terms of use: Documents in EconStor mayJEL-Code: D850, G200.

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“…One reading of these findings is that, in the absence of policy coordination, competing jurisdictions will implement "beggar thy neighbor" policies that may result in a harmful "race to the bottom" in regulatory standards (see e.g., Acharya, Wachtel and Walter (2009)). My finding that one jurisdiction's policies can impose sizable externalities that affect real activity in other regions arguably lends support to this view.…”

Section: Introductionmentioning

confidence: 99%

Policy Externalities and Banking Integration

Smolyansky

2016

FEDS

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Can policies directed at the banking sector in one jurisdiction spill over and affect real economic activity elsewhere? To investigate this question, I exploit changes in tax rates on bank profits across U.S. states. Banks respond by reallocating small-business lending to otherwise unaffected states. Moreover, counties in non-tax-changing states that have more exposure to"treated"banks experience greater changes in lending, which in turn impacts local employment. The findings demonstrate that policies aimed at the banking sector in one jurisdiction can impose externalities on other regions. Critically, financial linkages between regions serve as the transmission channel for these policy externalities. *

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International Alignment of Financial Sector Regulation

Cited by 13 publications

References 3 publications

Regulatory Arbitrage and International Bank Flows

Regulatory Arbitrage and International Bank Flows

Complex Financial Networks and Systemic Risk: A Review

Policy Externalities and Banking Integration

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