dunnettreader + banking   233

Understanding the Surge in Commercial Real Estate Lending - Economic Brief, August 2017 | Richmond FRB
U.S. banks have increased their commercial real estate (CRE) lending significantly in the past five years. Economists and regulators note that some positive factors are driving this trend, but they also see potential risks. Analysts at the Richmond Fed have found that some banks could be especially vulnerable if economic conditions deteriorate. These include institutions that are in certain major urban areas and have high concentrations of CRE loans, rapid CRE loan growth, and heavy reliance on "noncore" (or illiquid) funding. But the analysts also conclude that, overall, banks' CRE exposures do not appear to be as elevated as they were before the Great Recession.
commercial_real_estate  liquidity  risk_management  credit_booms  leverage  mortgages  financial_regulation  real_estate  Great_Recession  business_cycles  financial_crisis  Evernote  banking 
august 2017 by dunnettreader
The Leverage Ratchet Effect by Anat R. Admati, Peter M. DeMarzo, Martin F. Hellwig, Paul C. Pfleiderer (October 2016) :: SSRN
Anat R. Admati, Stanford Graduate School of Business; Peter M. DeMarzo. Stanford Graduate School of Business, NBER; Martin F. Hellwig, Max Planck Institute for Research on Collective Goods, U. of Bonn - Dep of Econ; Paul C. Pfleiderer, Stanford Graduate School of Business -- Max Planck - Collective Goods Bonn 2013/13
credit_booms  recapitalization  corporate_finance  debt-overhang  debt-seniority  leverage  banking  financial_crisis  debt-restructuring  downloaded  capital_markets  financial_regulation  equity-corporate  paper  debt 
november 2016 by dunnettreader
Gary Gorton
Mobile Collateral versus Immobile Collateral
Gary Gorton, Tyler Muir
NBER Working Paper No. 22619
Issued in September 2016
NBER Program(s):   AP   CF   DAE   EFG   ME
In the face of the Lucas Critique, economic history can be used to evaluate policy. We use the experience of the U.S. National Banking Era to evaluate the most important bank regulation to emerge from the financial crisis, the Bank for International Settlement's liquidity coverage ratio (LCR) which requires that (net) short-term (uninsured) bank debt (e.g. repo) be backed one-for-one with U.S. Treasuries (or other high quality bonds). The rule is narrow banking. The experience of the U.S. National Banking Era, which also required that bank short-term debt be backed by Treasury debt one-for-one, suggests that the LCR is unlikely to reduce financial fragility and may increase it.
NBFI  NBER  financial_stability  risk_management  collateral  financial_economics  capital_markets  bad_regulation  leverage  financial_system  risk-systemic  paywall  money_market  banking  paper  financial_regulation  BIS 
october 2016 by dunnettreader
Hanson, Shleifer, Stein & Vishny - Banks as patient fixed-income investors (2015) | Andrei Shleifer - J of Fin Econ
Hanson, Samuel, Andrei Shleifer, Jeremy C Stein, and Robert W Vishny. 2015. “Banks as patient fixed-income investors.” Journal of Financial Economics 117 (3): 449-469.
We examine the business model of traditional commercial banks when they compete with shadow banks. While both types of intermediaries create safe “money-like” claims, they go about this in different ways. Traditional banks create money-like claims by holding illiquid fixed-income assets to maturity, and they rely on deposit insurance and costly equity capital to support this strategy. This strategy allows bank depositors to remain “sleepy”: they do not have to pay attention to transient fluctuations in the market value of bank assets. In contrast, shadow banks create money-like claims by giving their investors an early exit option requiring the rapid liquidation of assets. Thus, traditional banks have a stable source of funding, while shadow banks are subject to runs and fire-sale losses. In equilibrium, traditional banks have a comparative advantage at holding fixed-income assets that have only modest fundamental risk but are illiquid and have substantial transitory price volatility, whereas shadow banks tend to hold relatively liquid assets. -- downloaded via iPhone to DBOX
article  institutional_investors  banking  shadow_banking  NBFI  long-term  equity  liquidity  bond_markets  money_market  deposits  risk-systemic  investment  downloaded  asset_prices  insolvency  risk_management  capital_adequacy 
august 2016 by dunnettreader
Bordalo, Gennaioli and Shleifer - Diagnostic Expectations and Credit Cycles - WP June 2016 version
Bordalo, Pedro, Nicola Gennaioli, and Andrei Shleifer. Working Paper. “Diagnostic Expectations and Credit Cycles”.Abstract
We present a model of credit cycles arising from diagnostic expectations – a belief formation mechanism based on Kahneman and Tversky’s (1972) representativeness heuristic. In this formulation, when forming their beliefs agents overweight future outcomes that have become more likely in light of incoming data. The model reconciles extrapolation and neglect of risk in a unified framework. Diagnostic expectations are forward looking, and as such are immune to the Lucas critique and nest rational expectations as a special case. In our model of credit cycles, credit spreads are excessively volatile, over-react to news, and are subject to predictable reversals. These dynamics can account for several features of credit cycles and macroeconomic volatility
PDF, revised June 2016 -- downloaded via iPhone to DBOX
financial_system  bubbles  creditors  investors  leverage  credit_crunch  paper  capital_markets  debt_crisis  consumer_demand  debt-overhang  banking  reallocation-labor  demand-side  credit_booms  downloaded  debt-restructuring  reallocation-capital  financial_crisis  investment 
august 2016 by dunnettreader
Iryna Stewen & Mathias Hoffmann - Holes in the Dike: the global savings glut, US house prices & the long shadow of banking deregulation (2015 wp)
Verein für Socialpolitik / German Economic Association in its series Annual Conference 2015 (Muenster): Economic Development - Theory and Policy with number 112834. -- Abstract -- We explore empirically how capital inflows into the US and financial deregulation within the United States interacted in driving the run-up (and subsequent decline) in US housing prices over the period 1990-2010. To obtain an ex ante measure of financial liberalization, we focus on the history of interstate-banking deregulation during the 1980s, i.e. prior to the large net capital inflows into the US from China and other emerging economies. Our results suggest a long shadow of deregulation: in states that opened their banking markets to out-of-state banks earlier, house prices were more sensitive to capital inflows. We provide evidence that global imbalances were a major positive funding shock for US wide banks: different from local banks, these banks held a geographically diversified portfolio of mortgages which allowed them to tap the global demand for safe assets by issuing private-label safe assets backed by the country-wide US housing market. This, in turn, allowed them to expand mortgage lending and lower interest rates, driving up housing prices. -- downloaded via iPhone to DBOX
banking  financial_crisis  deregulation  US_economy  downloaded  financial_regulation  global_imbalance  capital_markets  post-Cold_War  financial_system  interstate_banking  savings  house_prices  securitization  financial_innovation  interest_rates  mortgages  international_finance  capital_flows  community_banks  paper  21stC  economic_history  competition-interstate  NBFI 
august 2016 by dunnettreader
Jean Tirole - Financial Crises, Liquidity, and the International Monetary System (eBook, Paperback 2016 and Hardcover 2002) - Princeton University Press
Written post Asia crisis but eternally applicable - he was focusing on capital flows when it still was heterodoxy -- Once upon a time, economists saw capital account liberalization--the free and unrestricted flow of capital in and out of countries--as unambiguously good. Good for debtor states, good for the world economy. No longer. Spectacular banking and currency crises in recent decades have shattered the consensus. In this remarkably clear and pithy volume, one of Europe's leading economists examines these crises, the reforms being undertaken to prevent them, and how global financial institutions might be restructured to this end. Jean Tirole first analyzes the current views on the crises and on the reform of the international financial architecture. Reform proposals often treat the symptoms rather than the fundamentals, he argues, and sometimes fail to reconcile the objectives of setting effective financing conditions while ensuring that a country "owns" its reform program. A proper identification of market failures is essential to reformulating the mission of an institution such as the IMF, he emphasizes. Next he adapts the basic principles of corporate governance, liquidity provision, and risk management of corporations to the particulars of country borrowing. Building on a "dual- and common-agency perspective," he revisits commonly advocated policies and considers how multilateral organizations can help debtor countries reap enhanced benefits while liberalizing their capital accounts.

Based on the Paolo Baffi Lecture the author delivered at the Bank of Italy, this refreshingly accessible book is teeming with rich insights that researchers, policymakers, and students at all levels will find indispensable. -- downloaded excerpt to Tab S2
books  kindle-available  downloaded  financial_system  financial_regulation  financial_crisis  banking  capital_adequacy  contagion  sovereign_debt  international_monetary_system  international_finance  international_political_economy  IMF  emerging_markets  globalization  global_governance  global_system 
august 2016 by dunnettreader
Dewatripont, M. and Rochet, J., Tirole, J. - Balancing the Banks: Global Lessons from the Financial Crisis (orig 2010) - Princeton University Press
The financial crisis that began in 2007 in the United States swept the world, producing substantial bank failures and forcing unprecedented state aid for the crippled global financial system. Bringing together three leading financial economists to provide an international perspective, Balancing the Banks draws critical lessons from the causes of the crisis and proposes important regulatory reforms, including sound guidelines for the ways in which distressed banks might be dealt with in the future.

While some recent policy moves go in the right direction, others, the book argues, are not sufficient to prevent another crisis. The authors show the necessity of an adaptive prudential regulatory system that can better address financial innovation. Stressing the numerous and complex challenges faced by politicians, finance professionals, and regulators, and calling for reinforced international coordination (for example, in the treatment of distressed banks), the authors put forth a number of principles to deal with issues regarding the economic incentives of financial institutions, the impact of economic shocks, and the role of political constraints.

Offering a global perspective, Balancing the Banks should be read by anyone concerned with solving the current crisis and preventing another such calamity in the future.
Downloaded Chapters 1 & 2 to Tab S2
books  kindle-available  downloaded  financial_system  financial_regulation  financial_crisis  banking  bank_runs  shadow_banking  capital_markets  capital_flows  capital_adequacy  liquidity  risk_management  incentives-distortions  incentives  international_finance  global_governance  regulatory_arbitrage  regulatory_avoidance  regulation-costs  regulation-enforcement  regulation-harmonization  regulation 
august 2016 by dunnettreader
Matt Levine - LendingClub's Troubles Bring Back Bad Memories - Bloomberg View - May 2016
Renaud Laplanche with, awkwardly, a hammer. Photographer: Slaven Vlasic/Getty Images for Tribeca Film Festival Print Wall Street Matt Levine is a Bloomberg View…
Instapaper  financial_regulation  banking  securitization  disintermediation  lending_standards  consumer_protection  credit  from instapaper
may 2016 by dunnettreader
Perry Mehring - Shadow banking’s enduring perils - INET - May 2016
In the immediate aftermath of the global financial crisis, most people thought that shadow banking was all in the past, and good riddance! Today, however, it is…
Instapaper  financial_system  capital_markets  money_market  shadow_banking  banking  leverage  financial_regulation  from instapaper
may 2016 by dunnettreader
What It's Worth - Building a Strong Financial Future
Americans everywhere struggle to build strong financial futures for themselves and their families. The new book, What It's Worth, provides a roadmap for what families, communities and our nation can do to move forward on the path to financial well-being.
Collection of essays by people working on financial inclusion, asset-building etc. - downloaded via iPhone to DBOX
gig_economy  education-finance  philanthropy  credit  usury  financial_innovation  US_society  inequality-wealth  local_government  pensions  corporate_citizenship  mobility  banking  wages  health_care  access_to_finance  housing  financial_regulation  report  social_entrepreneurs  poverty  downloaded  welfare  US_economy  US_politics  families  mortgages  segregation  inequality  NBFI  unemployment  US_government 
april 2016 by dunnettreader
Price V. Fishback - How Successful Was the New Deal? The Microeconomic Impact of New Deal Spending and Lending Policies in the 1930s | NBER January 2016
NBER Working Paper No. 21925 -- The New Deal during the 1930s was arguably the largest peace-time expansion in federal government activity in American history. Until recently there had been very little quantitative testing of the microeconomic impact of the wide variety of New Deal programs. Over the past decade scholars have developed new panel databases for counties, cities, and states and then used panel data methods on them to examine the examine the impact of New Deal spending and lending policies for the major New Deal programs. In most cases the identification of the effect comes from changes across time within the same geographic location after controlling for national shocks to the economy. Many of the studies also use instrumental variable methods to control for endogeneity. The studies find that public works and relief spending had state income multipliers of around one, increased consumption activity, attracted internal migration, reduced crime rates, and lowered several types of mortality. The farm programs typically aided large farm owners but eliminated opportunities for share croppers, tenants, and farm workers. The Home Owners’ Loan Corporation’s purchases and refinancing of troubled mortgages staved off drops in housing prices and home ownership rates at relatively low ex post cost to taxpayers. The Reconstruction Finance Corporation’s loans to banks and railroads appear to have had little positive impact,although the banks were aided when the RFC took ownership stakes. -- paywall on SSRN
paper  SSRN  paywall  economic_history  20thC  Great_Depression  New_Deal  entre_deux_guerres  Keynesianism  housing  mortgages  banking  agriculture  demand-side  government-roles  government_finance  microeconomics 
february 2016 by dunnettreader
Quaker bankers: building trust on the basis of sincerity, reciprocity and charity | Magic, Maths & Money - Feb 2016
This post follows discussions of the norms sincerity, reciprocity and charity in financial markets. It suggests that the success of Quaker finance, that funded… Tracks the importance of Quaker-owned banks to the development of UK financial system - the number of big-name banking families with Quaker founders is striking. Their personalized methods of working on reputation (theirs and their borrowers) based on shared standards of probity and transparency, disciplined by membership in the Quaker community - allowed them to not only grow in the loan business, but become big in the bills market. The Quaker method of collecting views re appropriate moral life practices, which were documented and circulated among the members - and set mutual expectations for ethical practices, including areas like bookkeeping and full disclosure. The Quaker firms were central to the system of country banks, capable of providing liquidity to halt bank runs, wind down problem institutions etc. Their bills business didn't survive the switch to the Bank of England becoming lender of last resort in the 1844 crisis. And their information advantages don't seem to have remained a competitive advantage as it had been in the pre Napoleonic_Wars era.
Instapaper  economic_history  financial_innovation  banking  17thC  18thC  19thC  British_history  Quakers  dissenters  Industrial_Revolution  ethics  norms  norms-business  accounting  accountability  reputation  disclosure  information-intermediaries  information-markets  money_market  Bank_of_England  country_banks  financial_crisis  bank_runs  lender-of-last-resort  from instapaper
february 2016 by dunnettreader
Edward Kane - Theory of How and Why Central-Bank Culture Supports Predatory Risk-Taking at Megabanks | INET (Dec 2015)
This paper applies Schein’s model of organizational culture to financial firms and their prudential regulators. It identifies a series of hard-to-change cultural norms and assumptions that support go-for-broke risk-taking by megabanks that meets the every-day definition of theft. The problem is not to find new ways to constrain this behavior, but to change the norms that support it by establishing that managers of megabanks owe duties of loyalty, competence, and care directly to taxpayers. -- downloaded pdf to Note
paper  downloaded  financial_system  financial_regulation  norms-business  incentives  incentives-distortions  banking  organizations  firms-theory  firms-structure  firms-organization 
february 2016 by dunnettreader
Paydaynomics — The Paydaynomist - Medium Jan 2016
The magic (money) roundaboutIn our second post we thought it would be constructive to put up a very simplified description of the economics of a payday lender…
Instapaper  access_to_finance  microfinance  OECD_economies  emerging_markets  financial_regulation  banking  credit  from instapaper
january 2016 by dunnettreader
A disrupters view on UK payday — The Paydaynomist - Medium Jan 2016
A disrupters view on UK paydayWe’d love to do it and you know you’ve always had it comingThis is our maiden post. It’s our birth story explaining why we, as two…
Instapaper  access_to_finance  UK_economy  UK_Government  financial_regulation  banking  credit  microfinance  OECD_economies  emerging_markets  from instapaper
january 2016 by dunnettreader
O Blanchard, J D Ostry, AR Ghosh, M Chamon - Macro effects of capital inflows: Capital type matters | VOX, CEPR’s Policy Portal - 26 November 2015
Some scholars view capital inflows as contractionary, but many policymakers view them as expansionary. Evidence supports the policymakers. This column introduces an analytic framework that knits together the two views. For a given policy rate, bond inflows lead to currency appreciation and are contractionary, while non-bond inflows lead to an appreciation but also to a decrease in the cost of borrowing, and thus may be expansionary.
paper  capital_flows  emerging_markets  capital_markets  monetary_policy  interest_rates  FX-rate_management  banking  FDI  portfolio  _investment  investors 
november 2015 by dunnettreader
Avinash Persaud - A blueprint for overcoming systemic risk | VOX, CEPR’s Policy Portal - 20 November 2015
As the recent Financial Stability Board decision on loss-absorbing capital shows, repairing the financial system is still a work in progress. This column reviews the author’s new book on the matter, Reinventing Financial Regulation: A Blueprint for Overcoming Systemic Risks. It argues that financial institutions should be required to put up capital against the mismatch between each type of risk they hold and their natural capacity to hold that type of risk. -- downloaded as pdf to Note
books  financial_regulation  financial_crisis  risk-systemic  risk_shifting  risk_management  risk_assessment  leverage  hedging  capital_adequacy  shadow_banking  liquidity  risk_premiums  firesales  banking  banking-universal  credit_ratings  balance_sheet  international_finance  maturity_transformation  downloaded 
november 2015 by dunnettreader
Monetary history - rural finance in northwest Europe from c 1400 | Real-World Economics Review Blog
a) Since at least 1400 rural lending and borrowing was at least in some regions common and tied to the life cycle of households and families, which (though…
Instapaper  economic_history  15thC  16thC  17thC  Europe-Early_Modern  financial_innovation  rural  Netherlands  agriculture  family  inheritance  marriage  households  collateral  banking  from instapaper
november 2015 by dunnettreader
Mike Koczal - Four Ways of Looking at a TBTF Subsidy: A Reply to Dean Baker - October 2015
The discussion over a Too Big To Fail (TBTF) subsidy, where the largest banks are able to borrow more cheaply as the result of potential future bailouts, is…
Instapaper  financial_system  financial_regulation  financial_crisis  banking  TBTF  Dodd-Frank  bailouts  US_politics  from instapaper
october 2015 by dunnettreader
Guillaume Vuillemey, review - Nicolas Buat, John Law: La dette ou comment s’en débarrasser - La Vie des idées - 8 juillet
Recensé : Nicolas Buat, John Law – La dette ou comment s’en débarrasser, Les Belles Lettres, Collection « Penseurs de la liberté », 2015, 272 p., 21 €.
-- Mots-clés : dette | monnaie | banques | XVIIIe siècle -- John Law a laissé son nom associé à un scandale financier considérable. Nicolas Buat retrace sa vie aventureuse, et ses projets ambitieux pour dynamiser l’économie et éteindre la dette de la France. -- Que l’on cherche à tirer de l’histoire de grands enseignements, ou que l’on se satisfasse d’y contempler une galerie de portraits et de tableaux sans conséquences pour notre temps, on ne peut demeurer indifférent au personnage de John Law. Le récent ouvrage biographique de Nicolas Buat – conservateur en chef des Archives de Paris – nous invite à le redécouvrir. S’il s’inscrit dans une série déjà relativement longue de travaux consacrés à Law (dont le plus connu est certainement le livre d’Edgar Faure, La Banqueroute de Law, paru en 1977), son grand mérite est de nous plonger dans l’atmosphère bouillonnante de la Régence, sans perdre le lecteur dans de trop pointilleuses descriptions du « Système » mis en place entre 1716 et 1720. -- downloaded pdf to Note
books  reviews  French_language  political_economy  18thC  biography  Law_John  French_government  French_politics  money  monetary_theory  monetary_policy  sovereign_debt  default  Mississippi_Company  bubbles  banking  currency  investors  Regency-France  financial_system  financial_crisis  capital_markets  financial_innovation  downloaded 
october 2015 by dunnettreader
Charles A.E. Goodhart, Enrico Perotti - Containing maturity mismatch | VOX, CEPR’s Policy Portal - 10 September 2015
In the last century, real estate funding by banks grew steadily. This column argues that the unprecedented expansion of banking in mortgage lending resulted in a high degree of maturity mismatch. The solution to this problem should focus on greater maturity matching, and not using insured deposits. One avenue to do so is by securitising mortgages with little maturity transformation. Another is to create intermediaries providing mortgage loans where the lender shares in the appreciation, while assuming some risk against the occasional bust. -- downloaded as pdf to Note
paper  banking  financial_system  financial_regulation  financial_crisis  capital_markets  risk-systemic  markets-structure  real_estate  mortgages  liquidity  money_market  deposit_insurance  disintermediation  maturity_transformation  securitization  institutional_investors  bubbles  Minsky  downloaded 
september 2015 by dunnettreader
Symposium: The Bailouts of 2007-2009 (Spring 2015) | AEAweb: Journal of Economic Perspectives Vol. 29 No.2
Austan D. Goolsbee and Alan B. Krueger - A Retrospective Look at Rescuing and Restructuring General Motors and Chrysler (pp. 3-24) **--** W. Scott Frame, Andreas Fuster, Joseph Tracy and James Vickery - The Rescue of Fannie Mae and Freddie Mac (pp. 25-52) **--** Charles W. Calomiris and Urooj Khan - An Assessment of TARP Assistance to Financial Institutions (pp. 53-80) **--** Robert McDonald and Anna Paulson - AIG in Hindsight (pp. 81-106) **--** Phillip Swagel - Legal, Political, and Institutional Constraints on the Financial Crisis Policy Response (pp. 107-22) -- available online, didn't download
article  journals-academic  financial_system  Great_Recession  financial_crisis  bailouts  bail-ins  capitalism-systemic_crisis  capital_markets  banking  bank_runs  shadow_banking  NBFI  securitization  credit_booms  credit_ratings  incentives-distortions  public-private_partnerships  Fannie_Mae  housing  leverage  financial_system-government_back-stop  financial_innovation  firesales  liquidity  asset_prices  Fed  lender-of-last-resort  regulatory_capture  regulatory_avoidance  credit_crunch  bankruptcy  government_agencies  government_finance  global_economy  global_governance  international_finance  international_monetary_system  international_crisis  property_rights  derivatives  clearing_&_settlement  GSEs  bubbles 
september 2015 by dunnettreader
Brad DeLong - Liberal Activism!: Federal Reserve Jackson Hole 2015 Weblogging Edition
Roundup of arguments against raising interest rates, starting with Summers. Krugman sees a split among the MIT-educated crowd of whether you're an insider with e.g. the Fed and IMF or an outsider like Summers and Krugman. Brad speculates it may be a combination of (1) Krugman's theory that "everybody wants to be Paul Volker" so wants "normalized" interest rates so they can (try to) conduct "normal" economic policy and (2) the Fed especially, being immersed in views coming from the banking sector, which still has significant input. He turns to a study from the Boston Fed -- Roger T. Johnson: Historical Beginnings: The Federal Reserve: "On June 23, 1913, President Wilson appeared before a joint session of Congress and presented his program... -- which goes into the gory details of the intense organized opposition to the creation of the Fed from the banks, and the structures that gave banks important ownership and policy influence. Downloaded pdf of Johnson study to Note
Instapaper  US_politics  economic_policy  monetary_policy  Fed  Congress  banking  lobbying  interest_rates  regulatory_capture  Krugman  Summers  downloaded 
august 2015 by dunnettreader
Steve Cecchetti and Kim Schoenholtz - Bond market liquidity: should we be worried? — Money, Banking and Financial Markets
Our bottom line is this: resilience of intermediaries and resilience of markets are mutually reinforcing. With more resilient institutions, someone is more likely to stand ready to make a market in bonds – both Treasuries and corporates – so long as the rewards are adequate. Since the less liquid a market is, the higher the return to market making will be, the more likely it is that someone will step up to trade when price moves are large. Put another way, better regulation has removed the public subsidy to trading activity that banks and others were able to capture prior to the crisis, so making markets has become more expensive and prices may have to move more than before to attract stabilizing traders. But during those periods when liquidity is particularly valuable, the rewards should exceed these higher capital and liquidity costs. We worry less, not more, because enhanced capital and liquidity requirements are making intermediaries more resilient. Tags: Corporate bonds, Bond market, Liquidity, U.S. Treasury bonds, High-frequency trading, Contagion, Systemic risk -- really good on corporate bonds and links to recent studies on the Treasury market, especially after the flash crash in October 2014 -- downloaded pdf to Note
financial_system  financial_regulation  financial_crisis  capital_markets  risk-systemic  markets-structure  HFT  liquidity  capital_adequacy  banking  broker-dealers  intermediation  corporate_finance  Dodd-Frank  downloaded 
august 2015 by dunnettreader
Jane E. Ihrig, Ellen E. Meade, Gretchen C. Weinbach - Monetary Policy 101: A Primer on the Fed's Changing Approach to Policy Implementation | US Federal Reserve Board of Governors - June 2015. - via IDEAS
The Federal Reserve conducts monetary policy in order to achieve its statutory mandate of maximum employment, stable prices, and moderate long-term interest rates as prescribed by the Congress and laid out in the Federal Reserve Act. For many years prior to the financial crisis, the FOMC set a target for the federal funds rate and achieved that target through purchases and sales of securities in the open market. In the aftermath of the financial crisis, with a superabundant level of reserve balances in the banking system having been created as a result of the Federal Reserve's large scale asset purchase programs, this approach to implementing monetary policy will no longer work. This paper provides a primer on the Fed's implementation of monetary policy. We use the standard textbook model to illustrate why the approach used by the Federal Reserve before the financial crisis to keep the federal funds rate near the FOMC's target will not work in current circumstances, and explain the approach that the Committee intends to use instead when it decides to begin raising short-term interest rates. -- downloaded pdf to Note
US_economy  financial_system  Fed  central_banks  monetary_policy  interest_rates  money_market  banking  GSEs  institutional_investors  NBFI  downloaded 
august 2015 by dunnettreader
Steve Cecchetti and Kim Schoenholtz - How the Fed will tighten — Money, Banking and Financial Markets - August 2015
So, as the FOMC moves to “normalize” monetary policy after years of extraordinary accommodation – eventually raising the federal funds rate to their projected long-run norm of nearly 4% – how, precisely, will the Fed tighten monetary policy? The answer is that the mechanics will be fundamentally different from previous Fed tightening cycles. While the nature of the prospective policy tools will be familiar to long-time specialists, their use will be radically different. As a result, the chapter on Fed operations in money and banking textbooks (including ours) will once again be substantially amended to explain this new framework to the next generation of students aiming to understand the U.S. central bank. This post summarizes why the Fed’s policy mechanics must change and the basics of how the operating framework will function going forward. For those interested in a more detailed version of this discussion, Fed researchers Ihrig, Meade, and Weinbach recently published an excellent primer that is likely to be a reference for years to come. Tags: Federal Reserve, Policy tools, Policy mechanics, Repo, Reverse repo, ON RRP, Term RRP, Term deposit, IOER, IORR, Interest on reserves, GSEs -- downloaded page as pdf to Note
US_economy  financial_system  Fed  central_banks  monetary_policy  interest_rates  money_market  banking  GSEs  institutional_investors  NBFI  downloaded 
august 2015 by dunnettreader
Emmanuel Mourlon-Druol - La zone euro est-elle viable? Une perspective historique - La Vie des idées - 20 mai 2014
La crise de la zone euro a révélé les faiblesses constitutives de la monnaie unique ; mais les débats portant sur sa viabilité se limitent trop souvent à une vision purement économique de la zone euro. L’histoire complexe de la création de l’euro éclaire les enjeux financiers et politiques internationaux de l’unification monétaire. -- in many ways it's the same-old, same-old -- a group of countries with intense economic interaction that gets whip-sawed by exchange rates in a constantly evolving world that's increasingly globalized, especially capital movements -- under a series of arrangements from Bretton Woods onwards, they've been trying to manage or mitigate the problem, but they never solve it -- he repeatedly notes that the entire EC budget isn't more than 1% of the aggregate GNP of the member states -- useful aide-mémoire for each step in the evolution of the EU and European money arrangements paralled with each modification of the international monetary system -- though he notes repeatedly that finance is extremely mobile, not only within the Eurozone or within the EU but globally, and that labor and fiscal adjustments are extremely immobile within the Eurozone by comparison, he doesn't draw the obvious link of these severe mismatches to the repeated problems the EU has faced re money -- downloaded pdf to Note
article  economic_history  political_history  European_integration  post-WWII  post-Cold_War  international_monetary_system  Bretton_Woods  EU_governance  FX  FX-rate_management  FX-misalignment  Eurozone  Eurocrsis  Great_Recession  financial_crisis  sovereign_debt  Europe-federalism  EU-regulation  cross-border  Labor_markets  banking  ECB  EU-elections  political_participation  EU-Parliament  EU-parties  monetary_union  monetary_theory  international_economics  capital_flows  capital_controls  EU-fiscal_policy  convergence-econimic  fiscal_policy  Maastricht  downloaded 
july 2015 by dunnettreader
Financial Market Trends - OECD Journal - Home page | OECD
‌The articles in Financial Market Trends focus on trends and prospects in the international and major domestic financial markets and structural issues and developments in financial markets and the financial sector. This includes financial market regulation, bond markets and public debt management, insurance and private pensions, as well as financial statistics. -- links to the contents of each issue of the journal
journal  website  paper  financial_system  global_economy  global_system  financial_regulation  financial_crisis  capital_markets  risk-systemic  international_finance  banking  NBFI  insurance  markets-structure  risk_assessment  risk_management  sovereign_debt  corporate_finance  corporate_governance  institutional_investors  pensions  consumer_protection  equity-corporate  equity_markets  debt  debt-overhang  leverage  capital_flows  capital_adequacy  financial_economics  financial_innovation  financial_system-government_back-stop  bailouts  too-big-to-fail  cross-border  regulation-harmonization  regulation-costs  statistics 
july 2015 by dunnettreader
Jakob de Haan, Dirk Schoenmaker -Teaching finance after the crisis | VOX, CEPR’s Policy Portal - 06 July 2015
The financial crisis brought with it many challenges, both to prevailing disciplinary tenets, and for research and policy more generally. This column outlines the lessons that can be drawn from the financial crisis – issues like financial market failures, macro-prudential policy, structural changes of the financial system, and the European banking union. It argues for the inclusion of these topics in curricula for the next generation of finance students
financial_economics  financial_system  financial_regulation  financial_crisis  capital_markets  EMH  information-markets  macroprudential_policies  cross-border  European_integration  ECB  banking  business_cycles  Minsky 
july 2015 by dunnettreader
Sven Langedijk,et al - The corporate debt bias and the cost of banking crises | VOX, CEPR’s Policy Portal - 04 July 2015
Sven Langedijk, Gaëtan Nicodème, Andrea Pagano, Alessandro Rossi --Strengthening the banking sector through higher equity capital is one of the key elements of policies aiming to reduce the probability of crises. However, the ‘corporate debt bias’ – the tendency of corporate tax systems to favour debt over equity – is at odds with this objective. This column estimates the benefits for financial stability of eliminating the corporate debt bias. Fully removing the debt bias is estimated to reduce potential public finance losses by between 25 and 55% for the six large EU countries sampled.
paper  financial_system  financial_regulation  financial_crisis  banking  capital_adequacy  debt  corporate_finance  leverage  tax_policy  interest_rates  equity-corporate  EU 
july 2015 by dunnettreader
Michael Minnis, Andrew G. Sutherland - Financial Statements as Monitoring Mechanisms: Evidence from Small Commercial Loans :: SSRN February 1, 2015
Both at University of Chicago - Booth School of Business -- We examine when banks use financial statements to monitor small commercial firms. Theoretical research offers competing predictions surrounding the use of financial statements as a monitoring device in such settings where reporting between firms and banks is not mandated. Using a proprietary dataset of bank information requests after loan initiation, we examine these predictions and find that financial statements are requested for only half of the loans in the sample. This variation is mediated by borrower credit risk, contracting mechanisms, such as collateral, and alternative information sources, such as tax returns. However, the relations we identify are not straightforward — the relation between borrower risk and financial statement requests is nonlinear and financial statements can be both substitutes and complements to the alternative mechanisms. Collectively, our results provide novel evidence of the fundamental demand for financial reporting in the small commercial loan market and the manner in which banks fulfill their role as delegated monitors. -- PDF File: 50 -- Keywords: loan monitoring, financial contracting, collateral, debt, relationship lending, taxes -- saved to briefcase
paper  SSRN  banking  SMEs  access_to_finance  credit  collateral  relationship_lending  intermediation  risk_management  risk_assessment  accounting  disclosure  credit_ratings 
july 2015 by dunnettreader
Frederick Tung -Leverage in the Board Room: The Unsung Influence of Private Lenders in Corporate Governance:: SSRN - UCLA Law Review, Vol. 57, 2009 (rev'd 2012)
Boston University School of Law --:The influence of banks and other private lenders pervades public companies. From the first day of a lending arrangement, loan covenants and built-in contingency provisions affect managerial decision making. Conventional corporate governance analysis has been slow to notice or account for this lender influence. Corporate governance discourse has traditionally focused only on corporate law arrangements. The few existing accounts of creditors' influence over firm managers emphasize the drastic actions creditors take in extreme cases - when a firm is in serious trouble - but in fact, private lender influence is a routine feature of corporate governance even absent financial distress. (..) I explain the regularity of lender influence on managerial decision making - "lender governance" - comparing this routine influence to conventional governance arrangements and boards of directors in particular. I show that the extent of private lender influence rivals that of conventional governance mechanisms, and I discuss the doctrinal and policy implications of this unsung influence. Accounting for lender governance requires a new examination of corporate fiduciary duties, debtor-creditor laws, and the regulatory reform proposals that have emerged to address the current financial crisis. I also discuss the implications of private lender influence for future corporate governance research. -- PDF File: 69 -- lender governance, corporate governance, covenants, credit agreement, private lender, private debt, creditor, financial regulation, financial crisis -- saved to briefcase
article  SSRN  corporate_finance  corporate_governance  creditors  banking  relationship_lending  financial_regulation  corporate_law  capital_markets  commercial_law  debtors  debtor-creditor  debt-restructuring  financial_crisis  finance_capital  corporate_control 
july 2015 by dunnettreader
Anne Beatty, Scott Liao - Financial Accounting in the Banking Industry: A Review of the Empirical Literature:: SSRN October 23, 2013
Anne Beatty, Ohio State - Dept of Accounting & Management Information Systems; Scott Liao, U of Toronto, Rotman School of Management -- Rotman School of Management Working Paper No. 2346752 -- We survey research on financial accounting in the banking industry. After providing a brief background of the micro-economic theories of the economic role of banks, why bank capital is regulated, and how the accounting regime affects banks’ economic decisions, we review three streams of empirical research. Specifically we focus on research examining the relation between bank financial reporting and the valuation and risk assessments of outside equity and debt, the relation between bank financial reporting discretion, regulatory capital and earnings management, and banks’ economic decisions under differing accounting regimes. We provide our views about what we have learned from this research and about what else we would like to know. We also provide some empirical analyses of the various models that have been used to estimate discretion in the loan loss provision. We further discuss the inherent challenges associated with predicting how bank behavior will respond under alternative accounting and regulatory capital regimes.-- PDF File: 121 -- Keywords: financial accounting; bank regulatory capital; information asymmetry -- saved to briefcase
paper  SSRN  financial_system  financial_regulation  capital_markets  banking  disclosure  accounting  capital_adequacy  asset_prices  risk  investors  leverage  incentives  incentives-distortions  balance_sheet  Basle 
july 2015 by dunnettreader
The Contribution of Bank Regulation and Fair Value Accounting to Procyclical Leverage by Amir Amel-Zadeh, Mary E. Barth, Wayne R. Landsman :: SSRN ( rev'd June 19, 2015)
Amir Amel-Zadeh, University of Cambridge, Judge Business School; Mary E. Barth, Stanford, Graduate School of Business; Wayne R. Landsman, U of North Carolina Kenan-Flagler Business School -- Rock Center for Corporate Governance at Stanford University Working Paper No. 147 -- Our analytical description of how banks’ responses to asset price changes can result in procyclical leverage reveals that for banks with a binding regulatory leverage constraint, absent differences in regulatory risk weights across assets, leverage is not procyclical. For banks without a binding constraint, fair value and bank regulation both can contribute to procyclical leverage. Empirical findings based on a large sample of US commercial banks reveal that bank regulation explains procyclical leverage for banks facing a binding regulatory leverage constraint and contributes to procyclical leverage for those that do not. Fair value accounting does not contribute to procyclical leverage. -- PDF File: 46 -- Keywords: Fair value accounting, procyclicality, leverage, risk-based capital regulation, financial institutions, commercial banks -- saved to briefcase
paper  SSRN  financial_system  financial_regulation  banking  capital_adequacy  leverage  procyclical  countercyclical_policy  macroprudential_regulation  risk  risk_management  asset_prices  firesales  accounting  financial_crisis  bubbles  Basle  international_finance 
july 2015 by dunnettreader
Karl Whelan - The Grexit Mechanism: What It Means For The Future Of the Euro | Medium - June 26 2015
Greek crisis exposes cracks in the euro’s design that won’t be fixed by Greece leaving. Despite the euro’s legal status as an irrevocable currency union, the… Nice review of the tangle of economic, political and legal issues -- Default isn't by itself enough to force Grexit, so it's really what political stance the ECB takes, and even with Grexit there are the other members of the Eurozone suffering from similar problems as Greece -- Whelan: In recent years, the single most important factor that has papered over the cracks in the euro has been Mario Draghi’s “whatever it takes” commitment to preserve the euro. But if whatever-it-takes doesn’t prevent a Greek exit, there would be serious questions about what kind of euro the ECB was actually willing to bother preserving. Worth remembering is that what Draghi actually said was: "Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough." The “within our mandate” bit has provided Draghi with plenty of wiggle room to decide what kind of euro he wants to preserve. It clearly doesn’t have to be one that includes Greece. And there may be others that get jettisoned. Whether this kind of a la carte euro will survive the test of time is highly questionable.
Instapaper  Eurozone  EU  ECB  EU_governance  Europe-federalism  monetary_policy  FX  lender-of-last-resort  Greece  Greece-Troika  IMF  sovereign_debt  banking  bank_runs  austerity  FX-misalignment  Spain  Portugal  Italy  political_economy  international_finance  international_monetary_system  from instapaper
june 2015 by dunnettreader
Arianna Lovera - La finance solidaire: Un marché civique pour le financement du travail | La Vie des idées - 15 janvier 2013
Face au marché capitaliste, il existerait un marché civique, dans le cadre duquel il est possible de financer les projets professionnels ou particuliers selon d’autres critères que celui de la maximisation du profit : c’est l’ambition de la finance solidaire, branche de l’économie solidaire qui permet de financer le travail en prenant en compte des critères extra-économiques ou éthiques. (...) les démarches d’octroi des prêts se fondent donc à la fois sur des critères bancaires traditionnels et sur des critères extra-économiques : parmi les premiers figure notamment l’analyse des bilans et des prévisionnels du sujet demandeur du prêt, dans le but de vérifier qu’il soit en condition de rembourser à la fois le prêt et les intérêts ; tandis que parmi les critères extra-économiques ou « éthiques » entrent des considérations concernant l’activité elle-même et son impact sur le tissu économico-social dans lequel elle s’inscrit. -- didn't download
article  financial_instiutions  financial_system  banking  nonprofit  solidarity  social_entrepreneurs  co-ops  access_to_finance  credit  financial_innovation  finance_capital 
june 2015 by dunnettreader
Steve Cecchetti and Kim Schoenholtz - Monetary policy and financial inclusion | Money and Banking - June 2015
Central bankers usually steer clear of discussions about inequality. They view monetary policy as a tool for stabilizing the economy. For many central banks,… -- discusses trade-offs between inflation and unemployment that won't be constant but will vary by structure of financial system including access to credit by lower income and wealth classes, which will both effect impact of recessions on behavior of demand and financial channels through which monetary policy is supposed to work -- so inequal impact doesn't have to be a policy objective that the central bank worries about like the objectives of economic recovery, or nflation, but it will be highly relevant as a condition for meeting the primary objectives and the effectiveness of tools available
Instapaper  monetary_policy  financial_system  banking  zero-bound  inflation  unemployment  business_cycles  access_to_finance  from instapaper
june 2015 by dunnettreader
Steve Cecchetti and Kim Schoenholtz - Dodd-Frank: Five Years After — Money, Banking and Financial Markets - June 2015
On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (hereafter, DF), the most sweeping financial regulatory… Very good roundup of the holes that are left, the inability to force a coherent inter-agency approach to key risk regulation areas (e.g. the Financial Stability Oversight couldn't force the SEC to write adequate Money Market Funds reg, making it even worse than before the crisis), and the areas where regs are excessively complex, costly etc -- so they either won't do the job (and regulators will wind up making ad hoc exceptions because they're not workable) or their going to get gamed. Basically comes down to the age-old problem of regulation by institutional form rather than by function. The financial crisis was the best chance we had to rationalize the system, and Paulson had Treasury working on a proposal to do just that, but it got trashed when the financial system blew up and everybody was battling for narrow interests in a crisis atmosphere with inflamed populist politics -- only thing positive was finally getting rid of OCC. I do think they're unnecessarily suspicious of the new consumer protection agency -- given that a full overhaul wasn't possible, somebody needs to be responsible for looking out for consumers, since the main regulators are focused on financial risk issues at the institutional or system level.
Instapaper  US_economy  US_politics  financial_regulation  financial_crisis  Fed  SEC  banking  capital_markets  government_agencies  risk  risk-systemic  risk_management  NBFI  shadow_banking  money_market  institutional_investors  consumer_protection  leverage  capital_adequacy  inter-agency  liquidity  arbitrage  markets-structure  intermediation  financial_instiutions  financial_system-government_back-stop  from instapaper
june 2015 by dunnettreader
Macroprudentialism – A new Vox eBook | VOX, CEPR’s Policy Portal 15 December 2014
Dirk Schoenmaker -- overview and TOC -- Macroprudentialism is now part of the standard macroeconomic toolkit but it involves a set of relatively untested policies. This column introduces a new VoX eBook that collects the thinking of a broad range of leading US and European economists on the matter. A consensus emerges on broad objectives of macroprudential supervision, but important disagreements remain among the authors. -- downloaded pdf to Note
financial_system  financial_regulation  financial_crisis  central_banks  macroprudential_regulation  leverage  business_cycles  banking  NBFI  shadow_banking  monetary_policy  EU  Eurozone  OECD_economies  credit  mortgages  downloaded 
june 2015 by dunnettreader
Georges Gloukoviezoff - Les banques face à leurs clients: Salariés de banque et inclusion bancaire | La Vie des idées - 28 janvier 2013
English translation March 2014 -- http://www.booksandideas.net/When-French-Banks-Encounter-their.html -- Most banks have now abandoned their previous function of providing advice. Instead, they view their services as products designed to maximize profits. They have started invoking the client’s autonomy as a way of passing on the risk of financial exclusion to their customers. In what ways have bank employees reacted to these new circumstances? -- Georges Gloukoviezoff est docteur en économie et spécialiste des questions d’inclusion financière des particuliers. Il est membre de l’Observatoire national de la pauvreté et de l’exclusion sociale. Il a publié en octobre 2010 aux Presses Universitaires de France "L’Exclusion bancaire. Le Lien social à l’épreuve de la rentabilité". Il tient également un blog sur la page d’Alternatives Economiques. -- downloaded French version as pdf to Note
article  France  financial_system  banking  access_to_finance  access_to_services  labor  labor-service_sector  consumer_protection  risk_management  risk_shifting  knowledge_economy  knowledge_workers  financial_innovation  advisory_services  business_practices  business-norms  profit  profit_maximization  financial_regulation  customer_relations  exclusion  exclusion-economic  economic_sociology  poverty  workforce  know-how  services  services-worker_autonomy  managerialism  productivity  incentives-distortions  consumer-know-how  downloaded 
june 2015 by dunnettreader
Grateful in Baltimore | Economic Principals
The news from Baltimore had seemed pretty bleak until Friday, when a 35-year-old city prosecutor brought charges against six police officers involved in the death of Freddie Gray last month. An attorney for the Fraternal Order of Police in Baltimore complained of an “egregious rush to judgment.” Those developments got me thinking about some other measures that have been taken over the years to improve civic life in the United States. Baltimore State’s Attorney Marilyn James Mosby grew up in the Dorchester neighborhood of Boston. He mother, father, aunts, and uncles were Boston police officers. Her grandfather, Prescott Thompson, helped organize the Massachusetts Association of Minority Law Enforcement Officers, in 1968. -- Walsh tracks the steps Mosby took to get her where she now is -- a combination of hard work, talent, and deliberate openings of opportunities that had been foreclosed to women and blacks. He ebds, after a series of stats that show conditions, despite being dreadful in Freddie Gray's neighborhood, have improved significantly due to hard work of reformers over decades and changes in government policies. He ends with a blast at those who would blame the financial crisis on CRA -- instead he thinks that the implementation (albeit too little and too slow) has been one of great policy success stories in halting and beginning to reverse the deliberate, racist obstacles to wealth accumulation of African-Americans. -- saved to Instapaper
US_history  US_economy  US_politics  US_politics-race  urban_politics  War_on_Poverty  affirmative_action  segregation  discrimination  housing  African-Americans  poverty  middle_class  banking  credit  access_to_finance  savings  central_government  local_government  local_politics  Instapaper  from instapaper
june 2015 by dunnettreader
Understanding the Modern Monetary System by Cullen O. Roche :: SSRN - revised April 1, 2013
Orcam Financial Group, LLC -- August 5, 2011 -- This paper provides a broad understanding of the workings of the modern fiat monetary system in the United States. The work is primarily descriptive in nature and takes an operational perspective of the modern fiat monetary system using the understandings of Monetary Realism. -- Pages in PDF File: 40 -- downloaded pdf to Note
macroeconomics  financial_economics  monetary_policy  monetary_theory  central_banks  banking  interest_rates  financial_system  financialization  demand-side  investment  economic_models  downloaded 
june 2015 by dunnettreader
Pedro Gurrola-Perez and David Murphy - :Filtered historical simulation Value-at-Risk models and their competitors | Bank of England - Working Paper No. 525 March 2015-
Financial institutions have for many years sought measures which cogently summarise the diverse market risks in portfolios of financial instruments. This quest led institutions to develop Value-at-Risk (VaR) models for their trading portfolios in the 1990s. Subsequently, so-called filtered historical simulation VaR models have become popular tools due to their ability to incorporate information on recent market returns and thus produce risk estimates conditional on them. These estimates are often superior to the unconditional ones produced by the first generation of VaR models. This paper explores the properties of various filtered historical simulation models. We explain how these models are constructed and illustrate their performance, examining in particular how filtering transforms various properties of return distribution. The procyclicality of filtered historical simulation models is also discussed and compared to that of unfiltered VaR. A key consideration in the design of risk management models is whether the model’s purpose is simply to estimate some percentile of the return distribution, or whether its aims are broader. We discuss this question and relate it to the design of the model testing framework. Finally, we discuss some recent developments in the filtered historical simulation paradigm and draw some conclusions about the use of models in this tradition for the estimation of initial margin requirements. -- downloaded pdf to Note
paper  financial_instiutions  risk  risk_management  financial_regulation  banking  business_cycles  capital_markets  capital_adequacy  NBFI  probability  economic_models  Basel  downloaded 
june 2015 by dunnettreader
Piotr Danisewicz, Dennis Reinhardt and Rhiannon Sowerbutts - On a tight leash: does bank organisational structure matter for macroprudential spillovers? | Bank of England Working Paper No. 524: February 2015
This paper examines whether cross-border spillovers of macroprudential regulation depend on the organisational structure of banks’ foreign affiliates. Our analysis compares the response of foreign banks’ branches versus subsidiaries in the United Kingdom to changes in macroprudential regulations in foreign banks’ home countries. By focusing on branches and subsidiaries of the same banking group, we are able to control for all the factors affecting parent banks’ decisions regarding the lending of their foreign affiliates. We document that there are important differences between the type of regulation and the type of lending. Following a tightening of capital regulation, branches of multinational banks reduce interbank lending growth by 6 percentage points more relative to subsidiaries of the same banking group. Lending to non-banks does not exhibit such differences. A tightening in lending standards or reserve requirements at home does not have differential effects on both interbank and non-bank lending in the United Kingdom. -- didn't download
paper  international_finance  banking  financial_regulation  bank_holding_cos  cross-border  money_market  capital_adequacy 
june 2015 by dunnettreader
Caspar Siegert and Matthew Willison - Estimating the extent of the ‘too big to fail’ problem – a review of existing approaches | Bank of England -- Financial Stability Paper 32: 13 February 2015
​How big is the ‘too big to fail’ (TBTF) problem? Different approaches have been developed to estimate the impact being perceived as TBTF might have on banks’ costs of funding. One approach is to look at how the values of banks’ equity and debt change in response to events that may have altered expectations that banks are TBTF. Another is to estimate whether debt costs vary across banks according to features that make them more or less likely to be considered TBTF. A third approach is to estimate a model of the expected value of government support to banks in distress. We review these different approaches, discussing their pros and cons. Policy measures are being implemented to end the TBTF problem. Approaches to estimating the extent of the problem could play a useful role in the future in evaluating the success of those policies. With that in mind, we conclude by outlining in what ways we think approaches need to develop and suggest ideas for future research. -- didn't download
paper  banking  financial_crisis  bank_runs  financial_system-government_back-stop  too-big-to-fail  rents  rent-seeking  risk_premiums  capital_markets  margin_requirements  equity_markets  leverage 
may 2015 by dunnettreader
Policy Statement - The implementation of ring-fencing: legal structure, governance and the continuity of services and facilities | Bank of England – PS10/15 - May 2015
The Prudential Regulation Authority is required under the Financial Services and Markets Act 2000 (as amended by the Financial Services (Banking Reform) Act 2013) to make policy to implement the ring-fencing of core UK financial services and activities. This policy statement will be of interest to banks which will be required to ring-fence their core activities. This will include banking groups with core deposits greater than £25 billion. It will also be of interest to financial and other institutions and customers who have dealings with ring-fenced bodies. The policy statement provides feedback on the responses received to Consultation Paper 19/14 published in October 2014, and the amendments to the draft rules and supervisory statements included in CP19/14. The policy statement covers three areas: (1) legal structure arrangements of banking groups subject to ring-fencing; (2) governance arrangements of ring-fenced bodies; and (3) arrangements to ensure continuity of services and facilities to ring-fenced bodies. -- plan for effective date in 2019 -- didn't download
public_policy  financial_regulation  Bank_of_England  banking  deposit_insurance  bank_runs  bank_holding_cos  corporate_governance  too-big-to-fail 
may 2015 by dunnettreader
Douglas J. Elliott and Qiao Yu - Reforming shadow banking in China | Brookings Institution - May 12, 2015
Shadow banking has become an important, and rapidly growing, part of Chinese finance. Much of the reporting and analysis for this sector focuses on the risks of shadow banking, which clearly do exist and are significant. However, the societal benefits, on the whole, appear to be even greater. Therefore, shadow banking should be reformed, to reduce the risks and increase the benefits, not abolished or shrunk simply for the sake of reducing its importance. The right approach is to find the optimum balance of societal benefits and risks, not to aim for an arbitrary size or role. Further, much of shadow banking results from a web of regulatory, bureaucratic, and policy constraints and pressures on the formal banking sector, as well as some internal weaknesses at the banks. Therefore, reform recommendations arising from a consideration of shadow banking need to extend into the formal banking sector. -- This paper will focus on recommendations for regulatory reform -- didn't download
paper  China-economy  banking  NBFI  shadow_banking  regulation-enforcement  financial_system  financial_regulation  financial_sector_development  financial_stability 
may 2015 by dunnettreader
Zoltan Jakab and Michael Kumhof - Banks are not intermediaries of loanable funds - and why this matters - Zoltan Jakab and Michael Kumhof | Bank of England - Working Paper No. 529 - 29 May 2015
In the intermediation of loanable funds model of banking, banks accept deposits of pre-existing real resources from savers and then lend them to borrowers. In the real world, banks provide financing through money creation. That is they create deposits of new money through lending, and in doing so are mainly constrained by profitability and solvency considerations. This paper contrasts simple intermediation and financing models of banking. Compared to otherwise identical intermediation models, and following identical shocks, financing models predict changes in bank lending that are far larger, happen much faster, and have much greater effects on the real economy. -- downloaded pdf to Note
paper  banking  intermediation  macroeconomics  economic_models  economic_theory  financial_economics  financial_system  credit  loanable_funds  downloaded 
may 2015 by dunnettreader
Charles A.E. Goodhart, Enrico Perotti - Maturity mismatch stretching: Banking has taken a wrong turn | VOX, CEPR’s Policy Portal CEPR - Policy Insight 81 05/06/2015
Banks were not always as mismatched as today.Till the 19th century, bank lending to the private sector was meant to be primarily for short-term, self-liquidating, trade-related working capital, especially in the guise of ‘real bills’, bills of exchange fnancing trade. This was true since the emergence of banks in the 15th century, supporting merchants in their long-distance trade. This approach persisted in the Anglo-American tradition, where banks discounted promissory notes and held the rest of the portfolio in easily saleable securities, especially Consols. This enabled a credible promise to depositors, as banks’ assets were either short-term, or easily sold, with little maturity mismatch. -- And then came Continental universal banking, employed to play catch up -- and then with disintermediation, and the need for banks to find other business, and securitization, and they became hostage to the long-wave boom and bust of real estate -- Land is scarce and its availability is fxed. In other words, real estate value has a large pure rent component. Thus in any expansion, real estate prices generally rise faster than consumer prices, and become prone to bubbles and busts. To avoid socialising risk taking, what is needed is an intermediation process where the fnancing comes from investors that assume the bulk of such risk. We call for solutions that ensure such risk bearing by focusing on two principles: much greater maturity matching and no insured deposit funding. These goals may be achieved by various means. One avenue is to securitise mortgages with little maturity transformation, such as those funded by bond or pension funds. Another is to create new intermediaries providing mortgage loans where the lender shares in the appreciation, while assuming some risk against the occasional bust. This may be seen as a shift towards the principles of Islamic banking, but it is also a return to tradition as in the early days of banking. -- downloaded pdf to Note
economic_history  18thC  19thC  20thC  21stC  banking  banking-universal  intermediation  maturity_transformation  disintermediation  capital_markets  securitization  housing  real_estate  bubbles  mortgages  financial_innovation  financial_crisis  liquidity  institutional_investors  debt-restructuring  debt-overhang  financial_stability  financial_system-government_back-stop  NBFI  downloaded 
may 2015 by dunnettreader
MN Baily, W Bekker and SE Holmes - The big four banks: The evolution of the financial sector, Part I | Brookings Institution - May 26, 2015
Martin Neil Baily, William Bekker and Sarah E. Holmes -- This report is the first in a series on the evolution of the financial sector. The series aims to retrace the major trends that have shaped the banking sector since the crisis and to orient the public as to where industry stands today. This first installment focuses on the “Big Four” banks: JP Morgan Chase, Bank of America, Citi, and Wells Fargo. This first report is meant to be a factual exploration of the balance sheets of the four largest banks. We will follow this with a report on the regional banks and then a sample of smaller banks. While we give some commentary on the data, the purpose at this stage is to allow readers access to a picture of the largest banks and form their own judgments about why the banks have changed. Putting together the balance sheets of the big four seemed at first as if it would be a straightforward task, but the reality has been different and more difficult. We have aimed to present an accurate picture in the following pages but we would welcome comments. -- didn't download
paper  US_economy  banking  financial_system  financial_crisis  capital_adequacy  capital_markets  too-big-to-fail  intermediation 
may 2015 by dunnettreader
Oren Levintal, Joseph Zeira - Toxic assets in the 18th century | VOX, CEPR’s Policy Portal - 21 September 2009
Problems of regulation appear whenever financial innovations change the ways capital markets operate. This column describes the 18th century emergence of the inconvertible banknote, a "toxic asset” ended by government regulation. The lesson is that free financial markets promote financial innovation, but government must provide adequate regulation keeping the market on track. -- downloaded page as pdf to Note
economic_history  British_history  18thC  financial_innovation  banking  currency  Scotland  free_banking  competition  financial_regulation  financial_crisis  downloaded 
may 2015 by dunnettreader
Niel Jay et al - Financial markets imperfections and the SME investment dearth | VOX, CEPR’s Policy Portal - 29 June 2014
Do all firms have equal access to external financing? -- Neil Kay, Gavin Murphy, Conor O'Toole, Iulia Siedschlag, Brian O'Connell -- Small and medium-size enterprises (SMEs) often report difficulties in obtaining external finance. Based on new research, this column argues that these difficulties are not due to greater financial risks associated with SMEs. Instead, they are the result of imperfections in the market for external finance that negatively affect smaller and younger enterprises. The same research has shown that these types of firms are also the most reliant on external finance to support their investment and growth. -- they had srats on firm-level performance that allowed them, after pulling out country-level differences in economic conditions, to compare access to finance by similarly successful enterprises, differentiated by size -- as expected, the SMEs had a harder time accessing credit (as well as equity, which is a harder problem to fix given information, transaction and liquidity costs that aren't size-invariant are worse for equity) .
SMEs  Europe  EU  financial_system  banking  credit  access_to_finance  investment 
may 2015 by dunnettreader
Thorsten Beck, Ralph De Haas, Steven Ongena - Understanding Emerging Market Banks: A new eBook | VOX, CEPR’s Policy Portal - 06 November 2013
New micro-level data sets allow better testing of existing and new hypotheses on how banks operate in the often challenging environment of emerging markets. This column introduces an eBook that reports on the findings of a recent conference in London on using different research methodologies and data sources in banking research the way towards an exciting research agenda. The papers presented in the conference and summarised in this eBook point *-* First, more detailed micro-level data help researchers and practitioners understand the impact of innovative products, lending techniques, and delivery channels. *-* Second, micro-level data allow a more careful analysis of the impact of specific financial-sector policies on banks and customers. *'* Third, the data opens the important area of how demand- and supply-side constraints on entrepreneurs affect access to external finance. Applying lessons from behavioural economics will be critical in the third point. -- didn't download
etexts  financial_economics  banking  microfinance  emerging_markets  financial_innovation  property_rights  rule_of_law  accounting  methodology-quantitative  methodology-qualitative  SMEs  investment  entrepreneurs  access_to_finance  access_to_services  behavioral_economics 
may 2015 by dunnettreader
Thorsten Beck, Asli Demirgüç-Kunt, Maria Soledad Martinez Peria - Foreign banks and small and medium enterprises: Are they really estranged? | VOX, CEPR’s Policy Portal - 01 April 2010
Small and medium enterprises are engines of economic growth. But what kind of market structure is more conducive to financing these enterprises? This column argues that different types of bank, applying different types of lending technology and organisational structures can all play a vital role in financing them. They're working with a big data set they developed -- shows quite different lending technologies as between foreign and domestic, but similar outcomes in volume of lending, conditions, pricing etc. The big differences are cross couhtry, where thoorer, less developed suffer from less access to credit for investment, higher pricing, etc -- which reflects overall economic conditions and business environment. -- nice use of data -- downloaded page as pdf to Note
financial_system  development  emerging_markets  LDCs  SMEs  access_to_finance  banking  financial_instiutions  cross-border  firms-structure  firms-organization  credit_ratings  financial_sector_development  financial_innovation  investment  collateral  downloaded 
may 2015 by dunnettreader
The strategic under-reporting of banks’ risk - Taylor Begley, Amiyatosh Purnanandam, Kuncheng Zheng | VOXEU - 08 May 2015
A key regulatory response to the Global Crisis has involved higher risk-weighted capital requirements. This column documents systematic under-reporting of risk by banks that gets worse when the system is under stress. Thus banks’ self-reported levels of risk are least informative in states of the world when accurate risk measurement matters the most.
paper  financial_system  financial_regulation  financial_crisis  capital_adequacy  risk-systemic  banking  Basle 
may 2015 by dunnettreader
Economist's View: 'Social Costs of the Financial Sector' - Luigi Zingale lecture and paper - May 2015
Via Tim Taylor, a quotation from Luigi Zingales ("watch video of the lecture or read the talk at his website"): "While there is no doubt that a developed economy needs a sophisticated financial sector, at the current state of knowledge there is no theoretical reason or empirical evidence to support the notion that all the growth of the financial sector in the last forty years has been beneficial to society. In fact, we have both theoretical reasons and empirical evidence to claim that a component has been pure rent seeking. ..." -- downloaded pdf to Note of Zingale paper
financial_system  financial_innovation  financial_sector_development  rent-seeking  financial_regulation  financialization  capital_markets  banking  NBFI  shadow_banking  economic_growth  video  downloaded 
may 2015 by dunnettreader
Filippo Occhino - Debt-Overhang Banking Crises | Cleveland Fed - Dec 2014
WP 14-25 -- This paper studies how a worsening of the debt overhang distortion on bank lending can explain banking solvency crises that are accompanied by a plunge of bank asset values and by a severe contraction of lending and economic activity. Since the value of bank assets depends on economic prospects, a pessimistic view of the economy can be self-fulfilling and can trigger a financial crisis: If economic prospects are poor, bank asset values decline, the bank risk of default rises, and the associated debt overhang distortion worsens. The worsening of the distortion leads to a contraction in bank loans and a decline in economic activity, which confirms the initial pessimistic view. Signals of the existence of systemic risk include: a rise in the volatility and the presence of two modes in the probability distribution functions of the returns of bank-issued bonds and of portfolios of bank-issued bonds and equities; and a surge in the correlation between bank-issued bond returns. Macroprudential policy should limit the sensitivity of bank balance sheets to the aggregate economy and to the financial sector, using investment restrictions, capital requirements, and stress tests. In the event of a crisis, policy options include reducing the above sensitivity with commitments and guarantees, stimulating the economy, and restructuring bank capital and ownership. -- didn't download -- wonder if he uses Minsky
paper  banking  financial_crisis  leverage  deleverage  economic_growth  risk-systemic  business_cycles  bank_runs  capital_markets  bond_markets  macroprudential_regulation  macroprudential_policies  volatility  default  firesales  FDIC  Fed  demand-side  credit  business-forecasts  Minsky  financial_economics 
may 2015 by dunnettreader
Jonathan D. Ostry , Atish R. Ghosh , and Mahvash S. Qureshi - Managing Capital Flows in Frontier Economies | IMF Direct - April 2015
By Jonathan D. Ostry , Atish R. Ghosh , and Mahvash S. Qureshi  There has been a remarkable increase in financial flows to frontier economies from private… Enfin! Just 20+ years late. Nice roundup of various people (like Rodrik) thinking about all the variables, including what sorts of local institutional capacity (government and financial markets and institutions) are required for (1) absorbing different types of capital flows or (2) if a country wants to restrict flows in some fashion, to manage different types of restrictions. Additionally, there are challenges to the basic premise of encouraging capital flows to frontier markets -- these countries are more likely to be investment constrained than the unproven assumption that they're savings constrained. Macroeconomic impacts are also getting a closer look, not only the dilemmas of managing monetary policy and exchange rates -- e. g., FDI can be defeated if inflows raise the rate to reduce trade advantages. Since the biggest issuers from frontier markets tend to be the state, there's a big potential impact on sustainability of fiscal policy (to say nothing of corruption), and again the exchange rate impacts can be severe in both directions. The post is mainly an outline of an ambitious, multidimensional research program that's emerging among development economists, financial economists, macroeconomics in both the OECD countries and think tanks in emerging markets and the IFIs. -- finally the discussion has moved off the obsession with flight capital that took root in the 1980s and was the trump played anytime anyone questioned the happy-happy conventional wisdom of capital liberalization promoters.
economic_theory  macroeconomics  capital_flows  FDI  IFIs  IMF  capital_controls  fiscal_policy  monetary_policy  FX  FX-misalignment  neoliberalism  globalization  emerging_markets  frontier_markets  competitiveness  technology_transfer  infrastructure  development  financial_system  financial_regulation  financial_sector_development  financial_stability  banking  interest_rates  institutional_investors  institutional_capacity  institution-building  central_banks  governance  bibliography  Instapaper  from instapaper
may 2015 by dunnettreader
Steve Cecchetti and Kim Schoenholtz - The euro area's debt hangover — Money, Banking and Financial Markets - April 2015
You wouldn’t know it from the record low level of government bond yields, but much of Europe lives under a severe debt burden. Nonfinancial corporate debt exceeds 100 percent of GDP in Belgium, Finland, France, Ireland, Luxembourg, Netherlands, Portugal, and Spain. And, gross government debt (as measured by Eurostat) is close to or exceeds this threshold in Belgium, France, Greece, Ireland, Italy, Portugal and Spain. Debt levels this high have important long-run consequences. (...) they are a drag on growth. High debt means that households have more difficulty maintaining consumption when income falls; firms may be unable to keep up production and investment when revenue dips; and governments are in no position to smooth expenditure when revenue falls. More economic volatility means lower growth. Beyond that, high levels of debt reduce the effectiveness of central bank stimulus. (...) So, what is the euro area to do? We see three paths out of this predicament: (1) breathtaking supply reforms that trigger an investment boom; (2) inflation; or (3) a mix of asset sales and debt relief.The first option is the best. The alternatives would threaten the survival of the euro, undermine the fiscal credibility of major governments, or both. [After pointing out the problems with 1 and 2, they look at how much would sovereign_debt have to be reduced to reach debt sustainability targets embodied in Maastricht] For Greece, the write-down is 71% of face value; for Spain, 63%; and for France 50%. Taken as a whole, meeting the 60% Maastricht criterion (while maintaining bank system capital) would require that (..the) combined debt of [Greece, Spain and France of] €9.36 trillion be written down by a total of €5.07 trillion. As extreme as this sounds, it is, in fact, insufficient. Many euro-area governments also face significant unfunded pension liabilities. (...) The sooner they own up to this, the better for their long-term growth prospects. -- copied to Pocket
EU  Eurozone  debt  debt-overhang  debt-restructuring  sovereign_debt  leverage  deleverage  economic_growth  economic_reform  creditors  default  monetary_policy  ECB  central_banks  interest_rates  investment  deficit_finance  debt_crisis  corporate_finance  demand-side  supply-side  capital_markets  Great_Recession  financial_crisis  financial_system  banking  capital_adequacy  Pocket 
april 2015 by dunnettreader
Steve Cecchetti and Kim Schoenholtz - Residential real estate in China: the delicate balance of supply and demand — Money, Banking and Financial Markets - April 2015
Some observers believe that demand for housing in China is price-insensitive for cultural reasons. Among other things, housing is viewed as a “status good” for those wishing to get married. Another favorable factor is the preparedness of Chinese policymakers to intervene and support housing markets should they soften. Then there is the possibility that central bank policy will be adjusted in a manner designed to further support real estate lending. Yet, there remain grounds for skepticism. The role of big-city home ownership as a status good in Japan did not prevent the massive and destructive land and housing price boom and bust in the 1980s. And, government actions to support China’s housing prices will be fighting an uphill battle if private expectations of capital gains weaken. Not only that, but the day may come when China sees the need to implement a tax on property, if only to provide a better underpinning for municipal finances. This would almost surely drive prices down quickly. Finally, the government’s other objectives of liberalizing the financial system (as a step toward internationalizing the renminbi) and increasing housing supply to meet the needs of a migrating population may prove incompatible with supporting high house price-to-rent ratios. -- really fine update on what's been happening in urbanization, local governments, policies re financial sector liberalization, GNP and personal income growth (and slow down) etc -- copied to Pocket
China  China-economy  financial_system  housing  asset_prices  bubbles  urbanization  economic_growth  financial_regulation  financial_sector_development  financial_stability  banking  NBFI  shadow_banking  regulation-enforcement  tax_reform  taxes  local_government  infrastructure  wages  economic_culture  municipal_finance  Pocket 
april 2015 by dunnettreader
Steve Cecchetti and Kim Schoenholtz -The mythic quest for early warnings — Money, Banking and Financial Markets - April 2015
Reviews a number of stress indexes developed since the financial crisis -- most show a good way of indicating where we are at any one time, and several may be useful in crisis management for identifying institutions with liquidity vs insolvency problems, but none tell us where we're going **--** Where does this leave us? Our answer is that we have yet another reason to be skeptical of time-varying, discretionary regulatory policy. In an earlier post, we noted that the combination of high information requirements, long transmission lags and significant political resistance made it unlikely time-varying capital requirements will be effective in reducing financial vulnerabilities. Our conclusion then, which we reiterate now, is that the solution is to build a financial system that is safe and resilient all of the time, since we really never know what is coming. That means a regulatory system based on economic function, not legal form, with sufficient capital buffers to guard against all but the very worst possibilities. In the end, a financial system that relies on an early warning indicator of imminent financial collapse seems destined to fail. -- copied to Pocket
financial_system  financial_regulation  financial_crisis  capital_adequacy  capital_markets  NBFI  information-markets  information-asymmetric  risk  risk-systemic  risk_management  Great_Recession  global_governance  banking  bank_runs  liquidity  Pocket 
april 2015 by dunnettreader
Andrew W. Lo, Thomas J. Brennan - Do Labyrinthine Legal Limits on Leverage Lessen the Likelihood of Losses?: An Analytical Framework - Texas Law Review, Vol. 90, No. 7, 2012 :: SSRN
Andrew Lo - Massachusetts Institute of Technology (MIT) - Sloan School of Management; Massachusetts Institute of Technology (MIT) - Computer Science and Artificial Intelligence Laboratory (CSAIL); National Bureau of Economic Research (NBER) *--* Thomas J. Brennan - Northwestern University School of Law. **--** A common theme in the regulation of financial institutions and transactions is leverage constraints. Although such constraints are implemented in various ways — from minimum net capital rules to margin requirements to credit limits — the basic motivation is the same: to limit the potential losses of certain counterparties. However, the emergence of dynamic trading strategies, derivative securities, and other financial innovations poses new challenges to these constraints. We propose a simple analytical framework for specifying leverage constraints that addresses this challenge by explicitly linking the likelihood of financial loss to the behavior of the financial entity under supervision and prevailing market conditions. An immediate implication of this framework is that not all leverage is created equal, and any fixed numerical limit can lead to dramatically different loss probabilities over time and across assets and investment styles. This framework can also be used to investigate the macroprudential policy implications of microprudential regulations through the general-equilibrium impact of leverage constraints on market parameters such as volatility and tail probabilities. -- Pages in PDF File: 36 -- Leverage, Liquidity, Financial Regulation, Capital Requirements, Macroprudential Policies, Net Capital Rules -- downloaded pdf to Note
article  SSRN  financial_system  financial_regulation  financial_crisis  markets-structure  banking  NBFI  shadow_banking  leverage  capital_adequacy  liquidity  capital_markets  money_market  derivatives  arbitrage  macroprudential_policies  macroprudential_regulation  risk-systemic  financial_innovation  bank_runs  downloaded 
april 2015 by dunnettreader
Reading About the Financial Crisis: A 21-Book Review by Andrew W. Lo :: SSRN
Massachusetts Institute of Technology (MIT) - Sloan School of Management; Massachusetts Institute of Technology (MIT) - Computer Science and Artificial Intelligence Laboratory (CSAIL); National Bureau of Economic Research (NBER) -- The recent financial crisis has generated many distinct perspectives from various quarters. In this article, I review a diverse set of 21 books on the crisis, 11 written by academics, and 10 written by journalists and one former Treasury Secretary. No single narrative emerges from this broad and often contradictory collection of interpretations, but the sheer variety of conclusions is informative, and underscores the desperate need for the economics profession to establish a single set of facts from which more accurate inferences and narratives can be constructed. -- Pages in PDF File: 41 -- Keywords: Financial Crisis, Systemic Risk, Book Review -- downloaded pdf to Note
paper  SSRN  reviews  books  economic_history  21stC  Great_Recession  financial_crisis  financial_system  financial_regulation  financialization  capital_markets  banking  NBFI  shadow_banking  regulation-enforcement  rent-seeking  fraud  debt  debtors  housing  securitization  derivatives  bank_runs  banking-universal  Glass-Steagal  risk_management  risk-systemic  financial_economics  global_system  global_imbalance  capital_flows  institutional_investors  institutional_economics  bubbles  Minsky  downloaded 
april 2015 by dunnettreader
Ashoka Mody - Living (dangerously) without a fiscal union | Bruegel.org - March 24 2015
The euro area’s political contract requires member nations to rely principally on their own resources when confronted with severe economic distress. Since monetary policy is the same for all, national fiscal austerity is the default response to counter national fiscal stress. Moreover, the monetary policy was itself stodgy in countering the crisis, and banking-sector problems were allowed to fester. And it was considered inappropriate to impose losses on private sector creditors. Thus, the nature of the incomplete monetary union and the self-imposed taboos led deep and persistent fiscal austerity to become the norm. As a consequence, growth was hurt, which undermined the primary objective of lowering the debt burden. To prevent a meltdown, distressed nations were given official loans to repay private creditors. But the stress and instability continued and soon it became necessary to ease the repayment terms on official loans. When even that proved insufficient, the German-inspired fiscal austerity was combined with the deep pockets of the European Central Bank. The ECB’s safety net for insolvent or near-insolvent banks and sovereigns, in effect, substituted for the absent fiscal union and drew the central bank into the political process. -- downloaded pdf to Note
paper  Great_Recession  Eurozone  fiscal_policy  monetary_policy  austerity  ECB  banking  financial_system-government_back-stop  financial_crisis  too-big-to-fail  creditors  sovereign_debt  financial_regulation  capital_adequacy  capitalization  bailouts  bail-ins  debt-restructuring  debt  debt_crisis  debt-seniority  deleverage  political_economy  EU_governance  monetary_union  downloaded 
april 2015 by dunnettreader
Òscar Jordà, Moritz Schularick, and Alan M. Taylor - Mortgaging the Future? | The Big Picture - Guest Post - March 27th, 2015
In the six decades following World War II, bank lending measured as a ratio to GDP has quadrupled in advanced economies. To a great extent, this unprecedented expansion of credit was driven by a dramatic growth in mortgage loans. Lending backed by real estate has allowed households to leverage up and has changed the traditional business of banking in fundamental ways. This “Great Mortgaging” has had a profound influence on the dynamics of business cycles. -- update of their 2012 article that goes back to 19thC and does more breakdown of the changes in the financial services industry -- downloaded page as pdf to Note
US_economy  economic_history  macroeconomics  financial_system  financial_innovation  financial_crisis  housing  mortgages  credit  debt  debt_crisis  business_cycles  financialization  NBFI  real_estate  banking  macroprudential_policies  macroprudential_regulation  macroeconomic_policy  downloaded 
march 2015 by dunnettreader
Richard Cantillon, An Essay on Economic Theory, Chantal Saucier, trans., Mark Thornton, ed. (2010) Books | Mises Institute
Mark Thornton and Chantal Saucier have accomplished the arduous task of bringing forth a new and improved translation of Cantillon’s famous work. Heretofore the only English translation of the Essai available has been the 1931 edition produced by Henry Higgs for the Royal Economic Society. Though competent, it has become less serviceable over time, as more and more of its shortcomings devolved (not the least of which is the antiquated use of “undertaker” in place of “entrepreneur”). Saucier provides a more accurate and lucid account, better suited to the 21st century. Thornton’s hand shows not only in competent guidance of the translator but in the inclusion of numerous explanatory footnotes that add historical context. Robert F. Hébert writes the foreword. -- downloaded pdf to Note
books  etexts  intellectual_history  18thC  France  Cantillon  political_economy  economic_theory  value-theories  systems_theory  business_cycles  financial_system  interest_rates  FX  capital_flows  banking  profit  risk  entrepreneurs  agriculture  demography  natural_resources  labor  capital  money  money_supply  money_market  mercantilism  trade-policy  trade-theory  downloaded 
february 2015 by dunnettreader
Thornton, Mark. "Cantillon on the Cause of the Business Cycle." - Quarterly Journal of Austrian Economics (2006) | Mises Institute
Thornton, Mark. "Cantillon on the Cause of the Business Cycle." The Quarterly Journal of Austrian Economics 9, No. 3 (Fall 2006): 45–60. -- Richard Cantillon was the first economist to successfully examine the cyclical nature of the capitalist economy. He lived at a time (168?–1734) when the institutions of the modern capitalist economy were first fully and widely established and the first major business cycles occurred. In contrast to the Mercantilists, Cantillon was an astute observer who developed a clear economic understanding of money, banking, international trade, and stock markets because this is where he risked his capital and earned his fortune. He modeled the economy as an interconnected whole and developed what we now know as the circular-flow model of the economy and the price-specie-flow mechanism of international money movements. He discovered that markets were regulated by the movements of prices based on supply and demand and identified equilibrating tendencies with market exchange. -- downloaded pdf to Note
article  intellectual_history  18thC  France  Cantillon  political_economy  economic_theory  economic_culture  business_cycles  mercantilism  speculative_finance  capital_markets  capital_flows  banking  money  money_market  systems_theory  FX  gold_standard  trade_finance  trade_deficits  trade-policy  prices  equilibrium  downloaded 
february 2015 by dunnettreader
Tarascio, Vincent J. "Cantillon's Essai: A Current Perspective." - The Journal of Libertarian Studies (1985) | Mises Institute
Tarascio, Vincent J. "Cantillon's Essai: A Current Perspective." Journal of Libertarian Studies 7, No. 2 (1985): 249–257. -- Professor Spengler's, "Richard Cantiilon: First of the Modems," published in 1954, remains the classic survey article of Cantillon's contributions to economic thought. These contributions consist of views on population and related matters, theory of value, monetary theory, and international trade and finance. Many of his ideas became a part of the economic thought of the closing years of the eighteenth century, and, as Professor Spengler points out, unfortunately, Cantillon's name had been stripped from most if not all of his ideas. Professor Spengler, then, has done both Cantillon and the economics profession a service by restoring to Cantillon his rightful place in the history of economic thought. -- downloaded pdf to Note
article  intellectual_history  18thC  France  Cantillon  political_economy  economic_theory  economic_sociology  macroeconomics  value-theories  monetary_theory  demography  trade-theory  trade_finance  trade_deficits  FX  capital_flows  banking  financial_system  downloaded 
february 2015 by dunnettreader
Liggio, Leonard P. "Richard Cantillon and the French Economists: Distinctive French Contributions to J.B. Say." - The Journal of Libertarian Studies ( 1985) | Mises Institute
Liggio, Leonard P. "Richard Cantillon and the French Economists: Distinctive French Contributions to J.B. Say." Journal of Libertarian Studies 7, No. 2 (1985): 295–304. Richard Cantillon's life and his Essai occurred at a time of transition in European political, economic and intellectual history. The late seventeenth century had experienced the crisis in European thought which paralleled the Scientific Revolution. Accompanying the scientific revolution was a revolution in economic thought. Criticisms of mercantilism began to lay the groundwork for the Economic Revolution of the eighteenth century. -- downloaded pdf to Note
article  intellectual_history  17thC  18thC  Europe-Early_Modern  Cantillon  Scientific_Revolution  social_theory  political_economy  IR_theory  mercantilism  economic_theory  economic_growth  methodology-quantitative  political_arithmetick  social_order  financial_system  banking  cross-border  capital_flows  capital_markets  sovereignty  sovereign_debt  downloaded 
february 2015 by dunnettreader
Special Issue: Microfinance -- AEAweb: American Economic Journal: Applied Economics Vol. 7 No.1, Jan 2015
Abstract of introductory article -- Causal evidence on microcredit impacts informs theory, practice, and debates about its effectiveness as a development tool. The six randomized evaluations in this volume use a variety of sampling, data collection, experimental design, and econometric strategies to identify causal effects of expanded access to microcredit on borrowers and/or communities. These methods are deployed across an impressive range of locations—six countries on four continents, urban and rural areas—borrower characteristics, loan characteristics, and lender characteristics. Summarizing and interpreting results across studies, we note a consistent pattern of modestly positive, but not transformative, effects. We also discuss directions for future research. -- broad conclusion to be expected contra the hype -- but focus still seems to be on *credit* (with assumptions re micro and SME entrepreneurs and business formation) rather than access to services -- also question whether the former Yugoslavia study really dealt with "micro", likely the sort of labeling of SMEs as micro like Aftab's programs
journals-academic  article  paywall  microfinance  access_to_finance  development  economic_growth  economic_sociology  development-impact  RCT  econometrics  causation  causation-social  financial_sector_development  financial_economics  financial_access  institutional_economics  banking  credit  financial_innovation  SMEs  access_to_services  EF-add 
january 2015 by dunnettreader
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