Author(s): Luis Garcia, Ulf Lewrick and Taja Sečnik Date: August 2021 Abstract: We study banks’ year-end window dressing in the European Union to assess how it affects the identification of global systemically important banks (G-SIBs) and the associated capital surcharges. We find that G-SIBs compress their balance sheet at year-end to an extent that they[…]
Author(s): Maurice Obstfeld Date: July 2021 Abstract: While the globalization of production has been a prominent target of anti-globalization backlash, globalized finance has seemed to be much less in the public bull’s-eye. The blueprint for the postwar international economy agreed at Bretton Woods in 1944 envisioned nothing like today’s extensive and fluid global capital market.[…]
Author(s): Miguel Ampudia, Thorsten Beck and Alexander Popov Date: June 2021 Abstract: Using exogenous variation generated by the creation of the Single Supervisory Mechanism (SSM) in the euro area, we find that relative to firms borrowing from banks remaining under national supervision, firms borrowing from SSM-supervised banks reduce intangible assets and increase tangible assets and[…]
Author(s): Mikhail Mamonov, Steven Ongena and Anna Pestova Date: May 2021 Abstract: We study the impact of global financial sanctions on the Russian banks and economy. Financial sanctions were consecutively imposed between 2014 and 2019, allowing potentially-targeted (but not yet sanctioned) banks to adjust their international and domestic exposures. Compared to similar other banks, targeted[…]
Author(s):Christoffer Kok, Carola Müller, Steven Ongena and Cosimo Pancaro Date:June 2021 Abstract: Using a difference-in-differences approach and relying on confidential supervisory data and an unique proprietary data set available at the European Central Bank related to the 2016 EU-wide stress test, this paper presents novel empirical evidence that supervisory scrutiny associated to stress testing has[…]
Author(s): Hans Degryse, Sotirios Kokas and Raoul Minetti Date: June 2021 Abstract: We study the impact of different dimensions of banks’ experience on the extent of banks’ moral hazard in loan markets. Using rich U.S. corporate loan-level data, we find that banks’ prior experience with borrowers and co-lenders reinforces their monitoring incentives. Banks’ sectoral experience,[…]
Author(s): Juan M. Morelli, Pablo Ottonello and Diego J. Perez Date: June 2021 Abstract: We study the role of global financial intermediaries in international lending. We construct a model of the world economy, in which heterogeneous borrowers issue risky securities purchased by financial intermediaries. Aggregate shocks transmit internationally through financial intermediaries’ net worth. The strength[…]
Author(s): Albert Banal-Estanol, Julian Kolm, Gyöngyi Lóránth Date: May 2021 Abstract: We study how bank resolution regimes affect investment. Banking groups create financing synergies by transferring excess financing capacity across units and lowering bankers’ agency rents. Single-point-of-entry (SPOE) resolution mutualizes losses, which permits ex-post efficient continuation of weaker units following negative shocks, but can prevent[…]
Author(s): Christian Friedrich, Pierre Guerin and Danilo Leiva Date: May 2021 Abstract: We propose a new strength measure of the global financial cycle by estimating a regime-switching factor model on cross-border equity flows. We then assess how this measure affects monetary policy independence, defined as central banks’ responses to exogenous changes in inflation. We show[…]
Author(s): Franklin Allen and Ansgar Walther Date: May 2021 Abstract: This paper studies the links between financial stability and the architecture of financial systems. We review the existing literature and provide organizing frameworks for analyzing three empirically important aspects of financial architecture: The rise of non-bank financial intermediaries, the regulatory response to these structural changes,[…]