Is there a Role for Funding in Explaining Recent U.S. Banks' Failures?

Bologna, Pierluigi

doi:10.5089/9781462311286.001

Cited by 29 publications

(29 citation statements)

References 34 publications

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“…We develop a simple decision tree for assessing bank vulnerability that exploits information from only a small number of indicators via a sequence of binary, threshold rules. The performance of this tree is then compared with commonly used regression-based approaches that attempt to weight all the information optimally (BCBS, 2000;Ratnovski and Huang, 2009;Bologna, 2011;Vazquez and Federico, 2012). …”

Section: Simplicity Versus Complexity In the Prediction Of Bank Failurementioning

confidence: 99%

Taking Uncertainty Seriously: Simplicity versus Complexity in Financial Regulation

et al. 2014

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Section: Simplicity Versus Complexity In the Prediction Of Bank Failurementioning

confidence: 99%

Taking Uncertainty Seriously: Simplicity versus Complexity in Financial Regulation

et al. 2014

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“…Banks with more stable funding structures continued to lend more relative to other banks during the global financial crisis (Cornett et al, 2010), and were less likely to fail (Bologna, 2011). The evidence also indicates that banks with larger capital cushions fared better during the global financial crisis in terms of stock returns (Demirgüç-Kunt and Huizinga, 2010).…”

Section: General Findings On the Performance And Risks Of Different Bmentioning

confidence: 61%

“…Short-term wholesale funding allows banks to manage their balance sheet size actively in a highly procyclical manner Shin 2010a, 2010b). In addition, banks with more stable funding structures continued to lend more relative to other banks during the global financial crisis (Cornett et al, 2010), and were less likely to fail (Bologna, 2011).…”

Section: Box 34: Literature Linking Bank Funding Models To Risksmentioning

confidence: 99%

IMPACT of FINANCIAL CRISIS 2008-2009 on BANKING SECTOR STRUCTURE IN UKRAINE

Versal¹

2015

BTSNUKE

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“…230 In the same vein, the likelihood of failure among banks with less reliance on short-term wholesale funding was lower. 231 It is shown that universal banks have a greater reliance on short-term wholesale funding, have a higher average size, have greater volatility of earnings, and higher levels of market risk compared to other banking models. 232 On the other hand, the size and scope could not produce the claimed benefits, especially, the benefits of diversification were far limited than expected and it was far offset by additional complexity.…”

Section: Impact On Banking Business Models and Banking Stabilitymentioning

confidence: 99%

Can the Plight of the European Banking Structural Reforms Be a Blessing in Disguise?

Nabilou

2019

SSRN Journal

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One of the problems perceived to be at the heart of the global financial crisis was an amalgamation of various commercial and investment banking activities under one entity, as well as the interconnectedness of the banking entities with other financial institutions, investment funds, and the shadow banking system. This paper focuses on various measures that aim to structurally separate the banking entities and their core functions from riskier financial activities such as (proprietary) trading or investments in alternative investment funds. Although banking structural reforms in the EU, UK, and the US have taken different forms, their common denominator is the separation of core banking functions from certain trading or securities market activities. Having reviewed the arguments for and against banking structural reforms and their varieties in major jurisdictions, including the EU, UK, US, France, and Germany, the paper argues that a more nuanced approach to introducing such measures at the EU level is warranted. Given the different market structures across the Atlantic and the lack of conclusive evidence on the beneficial impact of banking structural reforms, the paper concludes that the withdrawal of the banking structural reforms proposal by the European Commission has been a prudent move. It seems that in the absence of concrete evidence, experimenting with structural reforms at the Member-State level would be less costly and would provide for opportunities for learning from smaller mistakes that could pave the way for a more optimal approach to introducing banking structural reforms at the European level in the future.The literature on financial regulation includes various measures for addressing the risks of financial institutions. From among these measures, three overarching approaches to reducing the externalities emanating from the financial institutions stand out. The first set of these measures include price-based regulations such as emission taxes in environmental regulation and capital or liquidity requirements in banking regulation. These regulations are normally introduced in tandem with enhanced and effective supervisory and resolution mechanisms. Such measures can also be combined with the structural limits on the size and scope of the activities of financial institutions. 15 Price-based regulations for addressing systemic risk may include the enhanced regulatory framework in the form of higher quantity and quality of lossabsorbing capital and stricter liquidity standards. 16 Second, quantity-based regulation such as emission quotas in environmental regulation. 17 In the banking industry, concentration limits, the regulations encouraging the allocation of certain ratios of loans to underprivileged segments of the society or regulations requiring gender balance on boards oftentimes take this form. Third, structural regulations are often imposed on the size, structure or scope of activities of financial institutions. 18 Its scope includes separating and moving risky and complex businesses to stan...

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Is there a Role for Funding in Explaining Recent U.S. Banks' Failures?

Cited by 29 publications

References 34 publications

Taking Uncertainty Seriously: Simplicity versus Complexity in Financial Regulation

Taking Uncertainty Seriously: Simplicity versus Complexity in Financial Regulation

IMPACT of FINANCIAL CRISIS 2008-2009 on BANKING SECTOR STRUCTURE IN UKRAINE

Can the Plight of the European Banking Structural Reforms Be a Blessing in Disguise?

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