This Week in Financial Regulation, June 18th

This Week in Financial Regulation, June 18th

News and Commentary

Stephen Matteo Miller has the second and third part of his series on the number of banks and bank concentration up at the Mercatus Center. The second piece focuses on the number and size of different types of banks, finding that while the number of small banks is on the decline, there are still many in the U.S. The third piece argues that while the number of banks in the U.S. was quite high (peaking in 1921) in the past, that was because of (mostly state) policies that favored small banks, making the question less “why are there so few banks now” but rather “why were there so many banks in the past?”

In VoxEU, John Vickers argues that current methods of calculating equity financing for the purposes of capital requirements are flawed because they do not employ market-based measures. While  market valuations of equity have their own shortcomings, current measurement methods may overstate how well-financed current banks are.


New Research

The Federal Reserve conducted an analysis of recent stress testing, analyzing why banks have performed particularly well in recent years. It finds that while stress tests are designed to be countercyclical by imagining severe recessions during good times, the current testing regime needs to be made more stringent to balance against the current “good times.”

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By |2019-06-18T14:24:03-07:00June 18th, 2019|Blog, Financial Regulation|