Systemic Risk, Institutional Design, and the Regulation of Financial Markets

Systemic Risk, Institutional Design, and the Regulation of Financial Markets

Author: Anita Anand

Publisher: Oxford University Press

Published: 2016-12-22

Total Pages: 257

ISBN-13: 0191083291

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Following the recent financial crisis, regulators have been preoccupied with the concept of systemic risk in financial markets, believing that such risk could cause the markets that they oversee to implode. At the same time, they have demonstrated a certain inability to develop and implement comprehensive policies to address systemic risk. This inability is due not only to the indeterminacy inherent in the term 'systemic risk' but also to existing institutional structures which, because of their existing legal mandates, ultimately make it difficult to monitor and regulate systemic risk across an entire economic system. Bringing together leading figures in the field of financial regulation, this collection of essays explores the related concepts of systemic risk and institutional design of financial markets, responding to a number of questions: In terms of systemic risk, what precisely is the problem and what can be done about it? How should systemic risk be regulated? What should be the role of the central bank, banking authorities, and securities regulators? Should countries implement a macroprudential regulator? If not, how is macroprudential regulation to be addressed within their respective legislative schemes? What policy mechanisms can be employed when developing regulation relating to financial markets? A significant and timely examination of one of the most intractable challenges posed to financial regulation.


Book Synopsis Systemic Risk, Institutional Design, and the Regulation of Financial Markets by : Anita Anand

Download or read book Systemic Risk, Institutional Design, and the Regulation of Financial Markets written by Anita Anand and published by Oxford University Press. This book was released on 2016-12-22 with total page 257 pages. Available in PDF, EPUB and Kindle. Book excerpt: Following the recent financial crisis, regulators have been preoccupied with the concept of systemic risk in financial markets, believing that such risk could cause the markets that they oversee to implode. At the same time, they have demonstrated a certain inability to develop and implement comprehensive policies to address systemic risk. This inability is due not only to the indeterminacy inherent in the term 'systemic risk' but also to existing institutional structures which, because of their existing legal mandates, ultimately make it difficult to monitor and regulate systemic risk across an entire economic system. Bringing together leading figures in the field of financial regulation, this collection of essays explores the related concepts of systemic risk and institutional design of financial markets, responding to a number of questions: In terms of systemic risk, what precisely is the problem and what can be done about it? How should systemic risk be regulated? What should be the role of the central bank, banking authorities, and securities regulators? Should countries implement a macroprudential regulator? If not, how is macroprudential regulation to be addressed within their respective legislative schemes? What policy mechanisms can be employed when developing regulation relating to financial markets? A significant and timely examination of one of the most intractable challenges posed to financial regulation.

Institutional Design and the New Systemic Risk in Banking Crises

Institutional Design and the New Systemic Risk in Banking Crises

Author: Anita Anand

Publisher:

Published: 2014

Total Pages: 42

ISBN-13:

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We argue that the concept of “systemic risk,” which traditionally focused on the relative stability of financial institutions and the consequences of their failure, has evolved to include macroprudential risk and the possibility that an entire economy will be affected by a triggering event or exogenous shock. As a result of this evolution, regulators have an important role to play in monitoring and managing systemic risk. We explore key policy instruments and the complement of domestic and international institutions that most effectively enable financial market regulators to discharge their role in monitoring and managing this new conception of systemic risk, which we refer to as the “new systemic risk” (NSR). We argue for more integration and co-ordination among institutions charged with systemic risk oversight and regulation, both domestically and internationally, recognizing that the existing set of institutions developed at a time when a more restricted conception of systemic risk prevailed. Specifically, we favour an approach to regulation under which financial markets are regulated according to certain regulatory objectives that are specified in the applicable legislation. Indeed, this approach identifies three basic regulatory objectives that the regulatory architecture must address: macro-economic stability typically associated with central banks in terms of implementing monetary policy and acting as lender of last resort in maintaining liquidity in the financial system; micro-prudential regulation which focuses on the financial stability of individual financial institutions; and conduct of business regulation designed to protect consumers of financial services and investors in financial institutions. We argue that this model benefits from coordination and cost advantages, while differentiating among objectives that are widely seen to require distinct regulatory strategies.


Book Synopsis Institutional Design and the New Systemic Risk in Banking Crises by : Anita Anand

Download or read book Institutional Design and the New Systemic Risk in Banking Crises written by Anita Anand and published by . This book was released on 2014 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: We argue that the concept of “systemic risk,” which traditionally focused on the relative stability of financial institutions and the consequences of their failure, has evolved to include macroprudential risk and the possibility that an entire economy will be affected by a triggering event or exogenous shock. As a result of this evolution, regulators have an important role to play in monitoring and managing systemic risk. We explore key policy instruments and the complement of domestic and international institutions that most effectively enable financial market regulators to discharge their role in monitoring and managing this new conception of systemic risk, which we refer to as the “new systemic risk” (NSR). We argue for more integration and co-ordination among institutions charged with systemic risk oversight and regulation, both domestically and internationally, recognizing that the existing set of institutions developed at a time when a more restricted conception of systemic risk prevailed. Specifically, we favour an approach to regulation under which financial markets are regulated according to certain regulatory objectives that are specified in the applicable legislation. Indeed, this approach identifies three basic regulatory objectives that the regulatory architecture must address: macro-economic stability typically associated with central banks in terms of implementing monetary policy and acting as lender of last resort in maintaining liquidity in the financial system; micro-prudential regulation which focuses on the financial stability of individual financial institutions; and conduct of business regulation designed to protect consumers of financial services and investors in financial institutions. We argue that this model benefits from coordination and cost advantages, while differentiating among objectives that are widely seen to require distinct regulatory strategies.

Financial Regulation at the Crossroads

Financial Regulation at the Crossroads

Author: Panagiotis Delimatsis

Publisher: Kluwer Law International B.V.

Published: 2011-01-01

Total Pages: 426

ISBN-13: 9041133550

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This book brings outstanding expertise and provides insightful perspectives from nineteen authors with diverse backgrounds, including officials from international organizations, national regulators, and commercial banking, as well as academics in law, economics, political economy, and finance. The authors not only shed light on the causes of the financial turmoil, but also present thoughtful proposals that contribute to the future policy debate, and discuss opportunities that financial services can offer in funding activities which raise standards of living through initiatives in microfinance, renewable energy, and food distribution. The contributions to this volume tackle several of the thorniest issues of financial regulation in a post-crisis environment, such as: the mechanics of contagion within the financial system and the role of liquidity; moral hazard when large financial institutions are no longer subject to the disciplinary effects of bankruptcy; bank capital requirements; management compensation; design of bank resolution schemes; a function-centric versus institution-centric regulatory approach; subsidization and compatibility of stimulus packages with EU rules on state aid; trade finance and the role of the GATS prudential carve-out; and the role of financial services in promoting human rights or combating climate change.


Book Synopsis Financial Regulation at the Crossroads by : Panagiotis Delimatsis

Download or read book Financial Regulation at the Crossroads written by Panagiotis Delimatsis and published by Kluwer Law International B.V.. This book was released on 2011-01-01 with total page 426 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book brings outstanding expertise and provides insightful perspectives from nineteen authors with diverse backgrounds, including officials from international organizations, national regulators, and commercial banking, as well as academics in law, economics, political economy, and finance. The authors not only shed light on the causes of the financial turmoil, but also present thoughtful proposals that contribute to the future policy debate, and discuss opportunities that financial services can offer in funding activities which raise standards of living through initiatives in microfinance, renewable energy, and food distribution. The contributions to this volume tackle several of the thorniest issues of financial regulation in a post-crisis environment, such as: the mechanics of contagion within the financial system and the role of liquidity; moral hazard when large financial institutions are no longer subject to the disciplinary effects of bankruptcy; bank capital requirements; management compensation; design of bank resolution schemes; a function-centric versus institution-centric regulatory approach; subsidization and compatibility of stimulus packages with EU rules on state aid; trade finance and the role of the GATS prudential carve-out; and the role of financial services in promoting human rights or combating climate change.

Understanding Systemic Risk in Global Financial Markets

Understanding Systemic Risk in Global Financial Markets

Author: Aron Gottesman

Publisher: John Wiley & Sons

Published: 2017-06-15

Total Pages: 268

ISBN-13: 1119348463

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An accessible and detailed overview of the risks posed by financial institutions Understanding Systemic Risk in Global Financial Markets offers an accessible yet detailed overview of the risks to financial stability posed by financial institutions designated as systemically important. The types of firms covered are primarily systemically important banks, non-banks, and financial market utilities such as central counterparties. Written by Aron Gottesman and Michael Leibrock, experts on the topic of systemic risk, this vital resource puts the spotlight on coherency, practitioner relevance, conceptual explanations, and practical exposition. Step by step, the authors explore the specific regulations enacted before and after the credit crisis of 2007-2009 to promote financial stability. The text also examines the criteria used by financial regulators to designate firms as systemically important. The quantitative and qualitative methods to measure the ongoing risks posed by systemically important financial institutions are surveyed. A review of the regulations that identify systemically important financial institutions The tools to use to detect early warning indications of default A review of historical systemic events their common causes Techniques to measure interconnectedness Approaches for ranking the order the institutions which pose the greatest degree of default risk to the industry Understanding Systemic Risk in Global Financial Markets offers a must-have guide to the fundamentals of systemic risk and the key critical policies that work to reduce systemic risk and promoting financial stability.


Book Synopsis Understanding Systemic Risk in Global Financial Markets by : Aron Gottesman

Download or read book Understanding Systemic Risk in Global Financial Markets written by Aron Gottesman and published by John Wiley & Sons. This book was released on 2017-06-15 with total page 268 pages. Available in PDF, EPUB and Kindle. Book excerpt: An accessible and detailed overview of the risks posed by financial institutions Understanding Systemic Risk in Global Financial Markets offers an accessible yet detailed overview of the risks to financial stability posed by financial institutions designated as systemically important. The types of firms covered are primarily systemically important banks, non-banks, and financial market utilities such as central counterparties. Written by Aron Gottesman and Michael Leibrock, experts on the topic of systemic risk, this vital resource puts the spotlight on coherency, practitioner relevance, conceptual explanations, and practical exposition. Step by step, the authors explore the specific regulations enacted before and after the credit crisis of 2007-2009 to promote financial stability. The text also examines the criteria used by financial regulators to designate firms as systemically important. The quantitative and qualitative methods to measure the ongoing risks posed by systemically important financial institutions are surveyed. A review of the regulations that identify systemically important financial institutions The tools to use to detect early warning indications of default A review of historical systemic events their common causes Techniques to measure interconnectedness Approaches for ranking the order the institutions which pose the greatest degree of default risk to the industry Understanding Systemic Risk in Global Financial Markets offers a must-have guide to the fundamentals of systemic risk and the key critical policies that work to reduce systemic risk and promoting financial stability.

Global Governance of Financial Systems

Global Governance of Financial Systems

Author: Kern Alexander

Publisher: Oxford University Press

Published: 2005-09-08

Total Pages: 519

ISBN-13: 0199883238

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The book sets forth the economic rationale for international financial regulation and what role, if any, international regulation can play in effectively managing systemic risk while providing accountability to all affected nations. The book suggests that a particular type of global governance structure is necessary to have more efficient regulation of the international financial system.


Book Synopsis Global Governance of Financial Systems by : Kern Alexander

Download or read book Global Governance of Financial Systems written by Kern Alexander and published by Oxford University Press. This book was released on 2005-09-08 with total page 519 pages. Available in PDF, EPUB and Kindle. Book excerpt: The book sets forth the economic rationale for international financial regulation and what role, if any, international regulation can play in effectively managing systemic risk while providing accountability to all affected nations. The book suggests that a particular type of global governance structure is necessary to have more efficient regulation of the international financial system.

Regulating and Supervising European Financial Markets

Regulating and Supervising European Financial Markets

Author: Mads Andenas

Publisher: Springer

Published: 2016-08-16

Total Pages: 438

ISBN-13: 3319321749

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The book analyses the institutions of the European financial market supervision and the challenges of financial markets. The current European supervisory structure for financial markets represents a major development in European supervisory history. Its operation however has to be explored and analysed critically. Has it gone far enough to provide a sufficiently comprehensive and resilient system to reduce or mitigate systemic risks and handle financial crises? Some claim it has gone too far already. Fresh and rigorous critical legal and economic analysis from an independent scholarly perspective are needed to assess whether the institutional design of the European supervisory architecture has proved itself to be an efficient and effective model. This book discusses many dimensions of the structure and workings of the European system from various angles providing different dimensions. The book makes an important contribution to the limited literature on financial market supervision.


Book Synopsis Regulating and Supervising European Financial Markets by : Mads Andenas

Download or read book Regulating and Supervising European Financial Markets written by Mads Andenas and published by Springer. This book was released on 2016-08-16 with total page 438 pages. Available in PDF, EPUB and Kindle. Book excerpt: The book analyses the institutions of the European financial market supervision and the challenges of financial markets. The current European supervisory structure for financial markets represents a major development in European supervisory history. Its operation however has to be explored and analysed critically. Has it gone far enough to provide a sufficiently comprehensive and resilient system to reduce or mitigate systemic risks and handle financial crises? Some claim it has gone too far already. Fresh and rigorous critical legal and economic analysis from an independent scholarly perspective are needed to assess whether the institutional design of the European supervisory architecture has proved itself to be an efficient and effective model. This book discusses many dimensions of the structure and workings of the European system from various angles providing different dimensions. The book makes an important contribution to the limited literature on financial market supervision.

The Future of Financial Regulation

The Future of Financial Regulation

Author: Iain G MacNeil

Publisher: Bloomsbury Publishing

Published: 2010-03-12

Total Pages: 849

ISBN-13: 1847317545

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The Future of Financial Regulation is an edited collection of papers presented at a major conference at the University of Glasgow in spring 2009, co-sponsored by the Economic and Social Research Council World Economy and Finance Programme and the the Australian Research Council Governance Research Network. It draws together a variety of different perspectives on the international financial crisis which began in August 2007 and later turned into a more widespread economic crisis following the collapse of Lehman Brothers in the autumn of 2008. Spring 2009 was in many respects the nadir since valuations in financial markets had reached their low point and crisis management rather than regulatory reform was the main focus of attention. The conference and book were deliberately framed as an attempt to re-focus attention from the former to the latter. The first part of the book focuses on the context of the crisis, discussing the general characteristics of financial crises and the specific influences that were at work this time round. The second part focuses more specifically on regulatory techniques and practices implicated in the crisis, noting in particular an over-reliance on the capacity of regulators and financial institutions to manage risk and on the capacity of markets to self-correct. The third part focuses on the role of governance and ethics in the crisis and in particular the need for a common ethical framework to underpin governance practices and to provide greater clarity in the design of accountability mechanisms. The final part focuses on the trajectory of regulatory reform, noting the considerable potential for change as a result of the role of the state in the rescue and recuperation of the financial system and stressing the need for fundamental re-appraisal of business and regulatory models.


Book Synopsis The Future of Financial Regulation by : Iain G MacNeil

Download or read book The Future of Financial Regulation written by Iain G MacNeil and published by Bloomsbury Publishing. This book was released on 2010-03-12 with total page 849 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Future of Financial Regulation is an edited collection of papers presented at a major conference at the University of Glasgow in spring 2009, co-sponsored by the Economic and Social Research Council World Economy and Finance Programme and the the Australian Research Council Governance Research Network. It draws together a variety of different perspectives on the international financial crisis which began in August 2007 and later turned into a more widespread economic crisis following the collapse of Lehman Brothers in the autumn of 2008. Spring 2009 was in many respects the nadir since valuations in financial markets had reached their low point and crisis management rather than regulatory reform was the main focus of attention. The conference and book were deliberately framed as an attempt to re-focus attention from the former to the latter. The first part of the book focuses on the context of the crisis, discussing the general characteristics of financial crises and the specific influences that were at work this time round. The second part focuses more specifically on regulatory techniques and practices implicated in the crisis, noting in particular an over-reliance on the capacity of regulators and financial institutions to manage risk and on the capacity of markets to self-correct. The third part focuses on the role of governance and ethics in the crisis and in particular the need for a common ethical framework to underpin governance practices and to provide greater clarity in the design of accountability mechanisms. The final part focuses on the trajectory of regulatory reform, noting the considerable potential for change as a result of the role of the state in the rescue and recuperation of the financial system and stressing the need for fundamental re-appraisal of business and regulatory models.

Reinventing Financial Regulation

Reinventing Financial Regulation

Author: Avinash Persaud

Publisher: Apress

Published: 2015-06-22

Total Pages: 261

ISBN-13: 1430245581

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Reinventing Financial Regulation offers an analysis of the fundamental flaws that plague the current system of financial regulation, one built around ideas of "risk-sensitivity" and "capital adequacy." Author Avinash Persaud argues that while some sensible reforms have been introduced, a fresh approach—centered on risk capacity—is required. When the entire regime is compromised, simply slapping bandages on each new wound will do nothing to cure the underlying disease. Reinventing Financial Regulation goes beyond an urgent call to fix our profoundly troubled and damaged financial markets. It is a blueprint for an effective financial regulation system that could very well save the future of finance. What would a well-regulated financial system look like? Until now, policymakers, financial experts, and leading academics have been content to avoid facing this question head–on. We have been offered piecemeal reforms that ultimately leave the global financial system exposed to different versions of the same risks that so recently brought it to its knees. The world economy literally cannot afford to dodge this question any longer. Persaud's goal to bring clarity and a powerful simplicity to the financial regulation process results in a systematic and apolitical framework for fixing the world's fractured financial industry and transforming its regulation—not just for today's financial climate, but once and for all.


Book Synopsis Reinventing Financial Regulation by : Avinash Persaud

Download or read book Reinventing Financial Regulation written by Avinash Persaud and published by Apress. This book was released on 2015-06-22 with total page 261 pages. Available in PDF, EPUB and Kindle. Book excerpt: Reinventing Financial Regulation offers an analysis of the fundamental flaws that plague the current system of financial regulation, one built around ideas of "risk-sensitivity" and "capital adequacy." Author Avinash Persaud argues that while some sensible reforms have been introduced, a fresh approach—centered on risk capacity—is required. When the entire regime is compromised, simply slapping bandages on each new wound will do nothing to cure the underlying disease. Reinventing Financial Regulation goes beyond an urgent call to fix our profoundly troubled and damaged financial markets. It is a blueprint for an effective financial regulation system that could very well save the future of finance. What would a well-regulated financial system look like? Until now, policymakers, financial experts, and leading academics have been content to avoid facing this question head–on. We have been offered piecemeal reforms that ultimately leave the global financial system exposed to different versions of the same risks that so recently brought it to its knees. The world economy literally cannot afford to dodge this question any longer. Persaud's goal to bring clarity and a powerful simplicity to the financial regulation process results in a systematic and apolitical framework for fixing the world's fractured financial industry and transforming its regulation—not just for today's financial climate, but once and for all.

Institutional Structure of Financial Regulation

Institutional Structure of Financial Regulation

Author: Robin Hui Huang

Publisher: Routledge

Published: 2014-06-20

Total Pages: 284

ISBN-13: 131791063X

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In light of on-going global financial crises, the institutional structure of financial regulation is currently a subject of significant academic and practical interest. The financial crisis has called into question the adequacy of financial regulation at the national and supranational levels, and has instigated financial regulatory reforms in major markets overseas. This has included the enactment of the Dodd-Frank Act in the US, and the programme to split the Financial Services Authority in the UK. This book examines the institutional structure reform of financial regulation from a comparative perspective, exploring both fundamental theories and international experiences. The book explores the three main institutional structures of financial regulation in the world; the sectors-based model, adopted in the US, Mainland China and Hong Kong; the twin-peaks model with Australia and the Netherlands as its pioneers; and the single-regulator model as represented by the former Financial Services Authority in the UK and the Financial Services Agency in Japan. The book contains contributions from renowned experts in the field of financial regulation including Douglas Arner, Jeffrey Carmichael, Robin Hui Huang, Dirk Schoenmaker, and Michael Taylor, and will be of interest to students and researchers of banking and finance law, and comparative economics.


Book Synopsis Institutional Structure of Financial Regulation by : Robin Hui Huang

Download or read book Institutional Structure of Financial Regulation written by Robin Hui Huang and published by Routledge. This book was released on 2014-06-20 with total page 284 pages. Available in PDF, EPUB and Kindle. Book excerpt: In light of on-going global financial crises, the institutional structure of financial regulation is currently a subject of significant academic and practical interest. The financial crisis has called into question the adequacy of financial regulation at the national and supranational levels, and has instigated financial regulatory reforms in major markets overseas. This has included the enactment of the Dodd-Frank Act in the US, and the programme to split the Financial Services Authority in the UK. This book examines the institutional structure reform of financial regulation from a comparative perspective, exploring both fundamental theories and international experiences. The book explores the three main institutional structures of financial regulation in the world; the sectors-based model, adopted in the US, Mainland China and Hong Kong; the twin-peaks model with Australia and the Netherlands as its pioneers; and the single-regulator model as represented by the former Financial Services Authority in the UK and the Financial Services Agency in Japan. The book contains contributions from renowned experts in the field of financial regulation including Douglas Arner, Jeffrey Carmichael, Robin Hui Huang, Dirk Schoenmaker, and Michael Taylor, and will be of interest to students and researchers of banking and finance law, and comparative economics.

Quantifying Systemic Risk

Quantifying Systemic Risk

Author: Joseph G. Haubrich

Publisher: University of Chicago Press

Published: 2013-01-24

Total Pages: 286

ISBN-13: 0226921964

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In the aftermath of the recent financial crisis, the federal government has pursued significant regulatory reforms, including proposals to measure and monitor systemic risk. However, there is much debate about how this might be accomplished quantitatively and objectively—or whether this is even possible. A key issue is determining the appropriate trade-offs between risk and reward from a policy and social welfare perspective given the potential negative impact of crises. One of the first books to address the challenges of measuring statistical risk from a system-wide persepective, Quantifying Systemic Risk looks at the means of measuring systemic risk and explores alternative approaches. Among the topics discussed are the challenges of tying regulations to specific quantitative measures, the effects of learning and adaptation on the evolution of the market, and the distinction between the shocks that start a crisis and the mechanisms that enable it to grow.


Book Synopsis Quantifying Systemic Risk by : Joseph G. Haubrich

Download or read book Quantifying Systemic Risk written by Joseph G. Haubrich and published by University of Chicago Press. This book was released on 2013-01-24 with total page 286 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the aftermath of the recent financial crisis, the federal government has pursued significant regulatory reforms, including proposals to measure and monitor systemic risk. However, there is much debate about how this might be accomplished quantitatively and objectively—or whether this is even possible. A key issue is determining the appropriate trade-offs between risk and reward from a policy and social welfare perspective given the potential negative impact of crises. One of the first books to address the challenges of measuring statistical risk from a system-wide persepective, Quantifying Systemic Risk looks at the means of measuring systemic risk and explores alternative approaches. Among the topics discussed are the challenges of tying regulations to specific quantitative measures, the effects of learning and adaptation on the evolution of the market, and the distinction between the shocks that start a crisis and the mechanisms that enable it to grow.