Post-crisis Bank Research Articles

A Conference on Postcrisis Banking

This essay provides an introduction to the special issue. We focus on four themes which are important for policymakers and researchers alike in view of the experiences of the global financial crisis of 2007-2009 and the ensuing sovereign debt crisis in the euro area: the relevance of the banking sector for the real economy; the future structure and regulation of the banking sector; the efficacy of past and current regulatory reforms; and the impact of crossborder banking on economic stability and financial development.

Maintaining Adequate Bank Capital

Journal of Money, Credit and BankingVolume 46, Issue s1 p. 157-180 ARTICLE Maintaining Adequate Bank Capital MARK J. FLANNERY, MARK J. FLANNERYSearch for more papers by this author MARK J. FLANNERY, MARK J. FLANNERYSearch for more papers by this author First published: 27 January 2014 https://doi.org/10.1111/jmcb.12085Citations: 55 Prepared for the Conference on Post-Crisis Banking, De Nederlandsche Bank, June 28–29, 2012. I would like to thank the following individuals for helpful discussions about bank capital and capital regulation: Viral Acharya, Darrell Duffie, Walter Engert, Wilson Ervin, Ken Garbade, Paul Glasserman, Bev Hirtle, Jamie McAndrews, Hamid Mehran, George Pennacchi, Enrico Perotti, Matt Richardson, Marc Saidenberg, Til Scheurmann, Jeremy Stein, Kevin Stiroh, James Vickery, and Zhenyu Wang. Their insights and information have greatly contributed to this paper. Ben Mandel and especially Maxim Dolinsky provided excellent research assistance. Remaining errors, and all opinions, are my own. Financial support from the Europlace Institute of Finance is gratefully acknowledged. Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Citing Literature Volume46, Issues1February 2014Pages 157-180 RelatedInformation

Our Financial Structures-Are They Prepared for Financial Instability?

Journal of Money, Credit and BankingVolume 46, Issue s1 p. 143-156 ARTICLE Our Financial Structures—Are They Prepared for Financial Instability? ERIC S. ROSENGREN, ERIC S. ROSENGRENSearch for more papers by this author ERIC S. ROSENGREN, ERIC S. ROSENGRENSearch for more papers by this author First published: 27 January 2014 https://doi.org/10.1111/jmcb.12084Citations: 6 The views expressed throughout this article are the author's, not necessarily those of his colleagues on the Federal Reserve's Board of Governors or the Federal Open Market Committee (FOMC). This article is based on keynote remarks delivered on June 29, 2012 at a conference in Amsterdam on Post-Crisis Banking sponsored by the Dutch Central Bank, the European Banking Center at Tilberg University, and the University of Kansas School of Business in affiliation with the Journal of Money, Credit and Banking. Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Citing Literature Volume46, Issues1February 2014Pages 143-156 RelatedInformation

How Can Bank Reforms Assuage Socioeconomic Ordeals in Emerging Economies?: Lessons for Egypt from the Turkish Experience

This research utilises a three-stage Stochastic Frontier Analysis/Data Envelope Analysis to investigate the relationship between post-crisis banking reforms, bank efficiency and macroeconomic performance from 2000 till 2010. The study draws lessons for Egypt from the Turkish bank reforms which successfully addressed the popular economic aspirations of growth, employment and stable prices. Whilst Turkey ensured that economic and banking reforms trickle down to all income groups, soaring food prices and high youth unemployment exasperated living conditions in Egypt, which helped trigger the Revolution of January 2011. The contribution of this study is to measure bank efficiency in accomplishing popular macroeconomic aims, instead of fulfilling the bank-centric goals of enhancing bank profitability and cost efficiency. The results reveal that the average-sized banks and domestic private banks display highest efficiency. Public debt, inflation and concentrated markets have unfavourable influences on bank efficiency.

Building the Foundations for a New Central Bank Doctrine: Redefining Central Banks’ Missions in the 21st Century

The 2007-2008 financial crisis demonstrated both the responsibilities that central bankers, alongside other actors, bear for turbulences of this kind as well as how economics can be used to provide central bankers and governments with the understanding and tools that they need to prevent the international financial system from collapsing. At the same time, central banks’ responses to the crisis have taken monetary policy into unknown territory. The paper’s first section diagnoses good and bad practice in post-crisis central banking; assesses the efficiency of pre-crisis doctrines; and identifies the dangers of actions exceeding certain limits. It specifically focuses on the European Central Bank’s much-debated intervention in certain peripheral bond markets, particularly Greece. The second section is more normative and lays the foundations for a social science perspective of how to manage modern central banks, an approach that draws on a variety of disciplines including economics, governance theory and management. This starts with a definition of the new doctrine and its underlying philosophy, followed by an identification of sound central banking practices (revolving around a few key concepts, notably inflation and financial stability). The missions and objectives of these practices are then defined (along with a choice of indicators), culminating in an exploration of which strategies and tools might be used in both normal and turbulent times. Lastly, a few concrete rules of governance are offered, built on the triptych of central banks’ independence, accountability and composition, with specific focus placed on the process for selecting governors fit to handle the new role that modern central banks are destined to assume in developed countries.

Three Futures for Postcrisis Banking in the Americas: The Financial Trilemma and the Wall Street Complex

This would seem an opportune moment to reshape banking systems in the Americas. But any effort to rethink and improve banking must acknowledge three major barriers. The first is a crisis of vision: there has been too little consideration of what kind of banking system would work best for national economies in the Americas. The other two constraints are structural. Banking systems in Mexico and the rest of Latin America face a financial regulation trilemma, the logic and implications of which are similar to those of smaller nations’ macroeconomic policy trilemma. The ability of these nations to impose rules that would pull banking systems in the direction of being more socially productive and economically functional is constrained both by regional economic compacts (in the case of Mexico, NAFTA) and by having a large share of the domestic banking market operated by multinational banks. For the United States, the structural problem involves the huge divide between Wall Street megabanks and the remainder of the U.S. banking system. The ambitions, modes of operation, and economic effects of these two different elements of U.S. banking are quite different. The success, if not survival, of one element depends on the creation of a regulatory atmosphere and set of enabling federal government subsidies or supports that is inconsistent with the success, or survival, of the other element.

Bank Credit and the 2008 Financial Crisis: A Cross-Country Comparison

This paper empirically estimates the main determinants of bank credit growth during the 2008 financial crisis. Using a sample covering over 80 countries, this paper finds that larger bank credit booms prior to the crisis and lower GDP growth of trading partners are among the most important determinants of the post-crisis bank credit slowdown. Structural variables such as financial depth and integration were also relevant. Finally, countercyclical monetary policy and liquidity played a critical role in alleviating bank credit contraction after the 2008 financial crisis, suggesting that countries should pursue appropriate institutional and macroeconomic frameworks conducive to countercyclical monetary policies.

Bank Credit During the 2008 Financial Crisis

This paper empirically estimates the main determinants of bank credit growth during the 2008 financial crisis. Using a sample covering over 80 countries, this paper finds that larger bank credit booms prior to the crisis and lower GDP growth of trading partners are among the most important determinants of the post-crisis bank credit slowdown. Structural variables such as financial depth and integration were also relevant. Finally, countercyclical monetary policy and liquidity played a critical role in alleviating bank credit contraction after the 2008 financial crisis, suggesting that countries should pursue appropriate institutional and macroeconomic frameworks conducive to countercyclical monetary policies.

Post-Crisis Bank Behavior: Lessons from Mercosur

Did the occurrence of systemic banking crises in the 1990s and 2000s significantly alter the behavior of banks in the Mercosur? The objective of this paper is to answer this question by analyzing changes in bank behavior after crises in the Mercosur region. To our knowledge, this is the first paper to apply the convergence methodology-which is common in the growth literature-to post-crisis bank behavior. Using a panel dataset of commercial banks during the period 1990-2006, we analyze the impact of crises on four sets of financial indicators of bank behavior-profitability, maturity preference, credit supply, and risk. The paper finds that most indicators of bank behavior, such as profitability, in fact revert to previous or more normal levels. However, a key finding of the paper is that private sector intermediation is significantly reduced for prolonged periods of time and that high levels excess liquidity persist well after the crisis.

Post-Crisis Bank Behavior: Lessons From Mercosur

Did the occurrence of systemic banking crises in the 1990s and 2000s significantly alter the behavior of banks in the Mercosur? The objective of this paper is to answer this question by analyzing changes in bank behavior after crises in the Mercosur region. To our knowledge, this is the first paper to apply the convergence methodology-which is common in the growth literature-to post-crisis bank behavior. Using a panel dataset of commercial banks during the period 1990-2006, we analyze the impact of crises on four sets of financial indicators of bank behavior-profitability, maturity preference, credit supply, and risk. The paper finds that most indicators of bank behavior, such as profitability, in fact revert to previous or more normal levels. However, a key finding of the paper is that private sector intermediation is significantly reduced for prolonged periods of time and that high levels excess liquidity persist well after the crisis.

Post-Crisis Bank Behavior: Lessons from Mercosur

Did the occurrence of systemic banking crises in the 1990s and 2000s significantly alter the behavior of banks in the Mercosur? The objective of this paper is to answer this question by analyzing changes in bank behavior after crises in the Mercosur region. To our knowledge, this is the first paper to apply the convergence methodology - which is common in the growth literature-to post-crisis bank behavior. Using a panel dataset of commercial banks during the period 1990-2006, we analyze the impact of crises on four sets of financial indicators of bank behavior-profitability, maturity preference, credit supply, and risk. The paper finds that most indicators of bank behavior, such as profitability, in fact revert to previous or more normal levels. However, a key finding of the paper is that private sector intermediation is significantly reduced for prolonged periods of time and that high levels excess liquidity persist well after the crisis.

Measuring the impact of restructuring and country-specific factors on the efficiency of post-crisis East Asian banking systems: Integrating DEA with SFA

This paper investigates the relationship between post-crisis bank restructuring, country-specific conditions and bank efficiency in Asian countries from 1997 to 2001 using an approach that integrates data envelopment analysis and stochastic frontier analysis. We focus on restructuring measures related to bank ownership. The results indicate that although domestic mergers produce more efficient banks, overall, restructuring does not lead to more efficient banking systems. Banking system inefficiencies are mostly attributed to country-specific conditions, particularly, high interest rates, concentrated markets and economic development.

Does post-crisis restructuring decrease the availability of banking services? The case of Turkey

This study examines the relationship between post-crisis bank consolidation and the number of bank branches in Turkey. Using a unique data set, the analysis addresses several issues related to the impact of market characteristics on branching behavior. The findings suggest that sales of failed institutions by the central authority lead to branch closures in small and uncompetitive markets where the buyer does not have a prior presence. Contrary to popular belief, mergers between healthy institutions do not always cause a decrease in the number of branches; rather, they are shown to increase the availability of banking services in concentrated markets.

The International Financial Architecture and the Limits to Neoliberal Hegemony

Unlike neoliberalism, [the] new financial architecture recognises the limits of a disembedded global economy. Yet, rather than seeking to rein in the forces of liberalisation by re-embedding intern...

La crise des banques coréennes après la crise

Gary A. Dymski - Korea's Post-Crisis Banking Crisis. This paper develops the argument that a foreign-bank-led wave of bank mergers and acquisitions will not yield universally higher welfare levels. Korea's banking crisis is not the result of the inefficiency or rent-seeking of its intermediaries, but of a regional structural financial crisis in East Asia after 1990. Most bank mergers and other structural changes in banking in Korea in recent years have resulted in large and risky public-sector debts, with gains taken primarily by overseas private-equity funds. Further, the impact of these structural shifts on lower-income households and small businesses may take Korea further toward a future of economic inequality and social bifurcation.