Some people are concerned that existing market structure regulation and liquidity incentives have skewed financial markets in favor of algorithmic and high-frequency trading (HFT). This type of market activity involves [...]
International activity related to the regulation and supervision of financial services has exploded since the global financial crisis. The crisis exposed weaknesses in the structure for regulating internationally active banks, [...]
Why did some countries learn to grow up to financial stability and others not? We explore this question by surveying the key determinants and major policy responses to banking, currency, [...]
We examine banks’ loan losses in Europe in 1982–2012 using a nonlinear three-factor model that takes into account output growth, real interest rate, and the ratio of private credit to [...]
This paper analyzes the impact of remuneration practices on banks’ risk-taking in a model with fire sales externalities. When these externalities are not internalized by a bank's shareholders and executives, [...]
Flawed and ineffective financial regulation fails to counter, and may exacerbate, distorted incentives within the financial system. The forces that lead to excessive fragility through unnecessary and dangerous levels of [...]
What should be our destination? We want a regulatory system that credibly requires banks to risk their stockholders’ investments, not taxpayers’ wealth. And we want to avoid permitting losses to [...]
This study examines Japanese banks’ behavior of adjusting denominators of capital ratios upon the introduction of Basel II regulations. The first analysis investigates the adjustments to the size and composition [...]
The Single Point of Entry (SPOE)—the FDIC strategy to implement its new Dodd–Frank Orderly Liquidation Authority (OLA)—promises to reduce the financial market turmoil caused by the failure of a large [...]
A growing theoretical literature advocates the use of countercyclical capital control policy, that is, the tightening of restrictions on net capital inflows during booms and the relaxation thereof during recessions. [...]