Author(s): Anna Gardella, Massimiliano Rimarchi and Davide Stroppa Date: February 2020 Abstract: Over the past decade, cross-border merger and acquisition(M&A)activity in the EU banking sector has remained far below its pre-crisis levels, despite the regulatory reforms implemented after the financial crisis. While the EU equipped itself with the Single Rulebook, convergent supervisory practices, a common crisis[…]

Author(s): Tobias Adrian, Peichu Xie Date: February 2020 Abstract: The USD asset share of non-U.S. banks captures the demand for dollars by these investors. An instrumental variable strategy identifies a causal link from the USD asset share to the USD exchange rate. Cross-sectional asset pricing tests show that the USD asset share is a highly[…]

Author(s): Leonardo Gambacorta, Sergio Mayordomo and Jose-Maria Serena Garralda Date: February 2020 Abstract: We explore the link between firms’ dollar bond borrowing and their FX-hedged funding opportunities, as reflected in a positive corporate basis (the relative cost of local to synthetic currency borrowing). Consistent with previous research, we first document that firms substitute domestic for dollar[…]

Author(s): Carlos Cantú, Leonardo Gambacorta and Ilhyock Shim Date: February 2020 Abstract: Papers in this volume were prepared as part of a BIS research protocol project on measuring the effectiveness of macroprudential policies using supervisory bank-level data implemented by five Asia-Pacific central banks. One of the main challenges in implementing a new framework for financial stability[…]

Author(s): Matthieu Bussière, Robert Hills, Simon Lloyd, Baptiste Meunier, Justine Pedrono, Dennis Reinhardt and Rhiannon Sowerbutts Date: January 2020 Abstract: By combining analysis of two unique confidential datasets, we examine how euro-area (EA) monetary policy and recipient-country prudential policy interact to influence the cross-border lending of French banks from France and the UK. We find that[…]

Author(s): Michael Brei, Leonardo Gambacorta, Marcella Lucchetta and Bruno Maria Parigi Date: January 2020 Abstract: The paper investigates whether impaired asset segregation tools, otherwise known as bad banks, and recapitalisation lead to a recovery in the originating banks’ lending and a reduction in non-performing loans (NPLs). Results are based on a novel data set covering 135[…]

Author(s): Maurice Obstfeld Date: February 2020 Abstract: Mark Twain is reputed to have remarked that history does not repeat itself, but it often rhymes. While the Global Financial Crisis of 2008-2009 was not a catastrophe on the order of World War I, there is a broad similarity in the sequelae to both of these events[…]

Author(s): Jean-Edouard Colliard and Co-Pierre Georg Date: February 2020 Abstract: Despite a heated debate on the perceived increasing complexity of financial regulation, there is no available measure of regulatory complexity other than the mere length of regulatory documents. To fill this gap, we propose to apply simple measures from the computer science literature by treating regulation[…]

Author(s): Linda Marlene Schilling Date: December 2019 Abstract: The paper provides a novel theory of how banks not only exploit but also cause being perceived as ‘too big to fail’. Bank creditors are also voters. Economic voting prompts politicians to grant bailouts given a bank failure. The bank’s capital structure acts as a tool to[…]

Author(s): Ethan Ilzetzki, Kenneth Rogoff and Carmen M. Reinhart Date: January 2020 Abstract: On the twentieth anniversary of its inception, the euro has yet to expand its role as an international currency. We document this fact with a wide range of indicators including its role as an anchor or reference in exchange rate arrangements-which we argue[…]