Search results for " Financial stability."

Capital Regulation and Italian Banking System: Theory and Empirical Evidence

2012

This paper aims to investigate the role of capital for banking institutions and provide an empirical analysis on large Italian banks’ capital adequacy. The paper is organized as follows. The first section introduces to the issue of the paper. The second section explains why the capital is important in the economics of banking firm. The paper reviews the theoretical literature on bank capital regulation. Empirical results on large Italian banks are reported on the third section. The final section contains summary and concluding comments.

The Role of Capital and Liquidity in Bank Lending: Are Banks Safer?

2020

The aim of this paper is to examine whether and to what extent bank capital requirements and liquidity standards influence the level of bank stability. Our approach is that both capital and liquidity affect lending growth, which in turn affects bank stability. We construct a panel dataset on a sample of 2,054 commercial banks from 117 developed and developing countries during the 2000–16 period. By applying a two-stage least squares (2SLS) empirical methodology, our findings show that capital and liquidity have a negative direct impact on the level of bank stability. However, this influence is counteracted by an indirect positive effect through the increased level of credit. Our results are…

Quantifying Structural Subsidy Values for Systemically Important Financial Institutions

2013

Abstract Claimants to Systemically Important Financial Institutions (SIFIs) would receive transfers when governments are forced into bailouts. Ex ante, this bailout expectation lowers SIFIs’ daily funding costs. The funding cost advantage reflects both the structural level of the government support and the time-varying market valuation for such a support. Based on a large worldwide sample of banks, we estimate the value of the structural subsidy, by exploiting expectations of state support embedded in credit ratings and by applying the long-run average value of the rating bonus. The value of the structural subsidy was already sizable, 60 basis points (bp), as of the end-2007, before the cri…

Financial Sector Reform After the Crisis: Has Anything Happened?

2013

We analyze the reactions of stock returns and CDS spreads of banks from Europe and the United States to four major regulatory reforms in the aftermath of the subprime crisis, employing an event study analysis. In contrast to the public perception that nothing has happened, we find that financial markets indeed reacted to the structural reforms enacted at the national level. All reforms succeeded in reducing bail-out expectations, especially for systemic banks. However, banks' profitability was also affected, showing up in lower equity returns. The strongest effects were found for the Dodd-Frank Act (especially the Volcker rule), whereas market reactions to the German restructuring law were …

Improving competitiveness, economic capital and financial stability through dynamic performance management in the italian state. A new sustainable de…

2013

Risk committee complexity and liquidity risk in the European banking industry

2021

Abstract The present study aims to investigate how bank governance characteristics are related to liquidity risk by analysing board composition, gender, and the risk committee. A dynamic panel data model is employed on a sample of European banks during the period after the financial crisis (from 2011 to 2017). Furthermore, we collect information about the profiles of the directors on the boards of banks, thereby creating five categories of risk committee members. To address the endogeneity issue, a generalised method of moments two-step estimator is implemented. The findings highlight that the fundamental role of the risk committee adequately shields banks against general liquidity risks. M…

OUTSTANDING DEVELOPMENTS IN THE ROMANIAN BANKING SYSTEM

2011

The Romanian banking system, after 1990, went through several stages in order to adapt to a new economic context, respectively to the necessary adjustment to the transition from centralized economy to market economy, and then, after the year 2000, adapting to meet the European Union’s membership requirements, and later, after 2007, adapting to adopt the euro currency. These events to which the Romanian banking system must adapt are known events. To which, however, join contingencies related to the onset and manifestation of the international financial crisis, events with direct impact on the banking system in Romania that determined changes both in the banking regulations, and in the struct…