Interaction of capital and liquidity regulation in the banking sector

Basel III responded to the financial crisis among other by redefining and expanding the capital requirements and by introduction of the liquidity requirements in the banking sector. Since banks' liquidity and capital positions influence each other through assets structure channel, asset quality channel and profitability channel, there exists a significant relationship among capital and liquidity regulatory tools. A bank can improve its capital and liquidity ratios by lowering risk-weighted assets (assets structure channel), but with the negative impact on the interest profit (profitability channel). We therefore aim to test the functionality of these two channels in relation to capital and liquidity positions in the Czech banking sector. We document the effect of the assets structure channel in case of liquidity and capital positions and effect of the profitability channel for the large banks. However, low profitability and introduction of a leverage ratio can limit the effect of assets structure channel on banks' capital positions.Web of Science65554552

Coordinating macroprudential policies within the Euro Area: the case of Spain

In the aftermath of the global financial crisis, there is consensus on the need for macroprudential policies to promote financial stability. However, the optimal way to implement such policies in the Euro area is a question open to debate, given that countries have to coordinate. In this paper, we propose a two-country, two-sector monetary union dynamic stochastic general equilibrium model (DSGE) with housing to analyze the optimal implementation of macroprudential policies in the Euro area. Currently, Spain is the only country within the EU that has not established a macroprudential regulator. We use Spain as a natural experiment to study the effects of a lack of coordination in the use of macroprudential policies in the European Monetary Union (EMU). We focus on a particular macroprudential policy, a rule regarding the loan-to-value ratio, which responds countercyclically to credit booms. We find that such a policy is welfare enhancing for the Euro area. Nevertheless, if one country does not implement the policy, but the rest of the EMU does, as in the current situation with Spain, this country still yields some benefits as a result of its partners' implementation of the policy because it gains from a more stable financial system without incurring any output costs. However, if all Euro countries actively implement the policy, the welfare gains for all of them are larger

Flagship Report on Macro-Prudential Policy in the Banking Sector

European System of Financial Supervisio

Urban civic pride and the new localism

Civic pride relates to how places promote and defend local identity and autonomy. It is often championed as a key value and aspiration of local government. This paper argues that civic pride has been under‐examined in geography, and in particular the emotional meanings of pride need to be better understood. In response, I present an emotional analysis of civic pride and discuss its role in British cities, particularly in the context of urban regeneration and the UK's new localism agenda. In the latter part of the paper I provide a case study of Nottingham in England, where I employ a discourse analysis of recent urban policy and local media to examine how civic pride is being mobilised and contested in the city. Examining civic pride is important because it shapes and reflects the political values that local governments stand for and provides a basis for thinking about how emotions are used strategically (and problematically) in urban policy. This paper complements and challenges existing literature on cities by showing how civic pride shapes, but also obscures, the ideological politics of local government and how, as geographers, we might consider more seriously the ways forms of power, identity and inequality are reproduced and contested through emotions such as pride

Low‐carbon transition risks for finance

The transition to a low‐carbon economy will entail a large‐scale structural change. Some industries will have to expand their relative economic weight, while other industries, especially those directly linked to fossil fuel production and consumption, will have to decline. Such a systemic shift may have major repercussions on the stability of financial systems, via abrupt asset revaluations, defaults on debt, and the creation of bubbles in rising industries. Studies on previous industrial transitions have shed light on the financial transition risks originating from rapidly rising “sunrise” industries. In contrast, a similar conceptual understanding of risks from declining “sunset” industries is currently lacking. We substantiate this claim with a critical review of the conceptual and historical literature, which also shows that most literature either examines structural change in the real economy, or risks to financial stability, but rarely both together. We contribute to filling this research gap by developing a consistent theoretical framework of the drivers, transmission channels, and impacts of the phase‐out of carbon‐intensive industries on the financial system and on the feedback from the financial system into the rest of the economy. We also review the state of play of policy aiming to protect the financial system from transition risks and spell out research implications

Regulation:Managing the Antinomies of Economic Vice and Virtue

In the quarter-century that SLS has been published, regulation has emerged as a new, and for many exciting, inter-disciplinary field. The concept itself requires a wider view of normativity than the narrow positivist one of law as command. It is certainly protean, ranging over many fundamental questions about the changing nature of the public sphere of politics and the state, and its interactions with the ‘private’ sphere of economic activity and social relations, as well as the mediation of these interactions, especially through law. This survey aims to outline and evaluate some of the main contours of the field as it has developed in this recent period, focusing on the regulation of economic activity. Regulation is seen as having emerged with the withdrawal by governments from direct provision of many economic and social services, to be replaced by corporatist bureaucracies and quasi-public agencies managing the complex public-private interactions of financialised capitalism. The arguments for ‘smart’ regulation have, in an era fixated on neo-liberalism, generally legitimised delegation of responsibility to big business. Its advocates, having been drawn into policy fields, have perhaps too often lost their critical edge, and allowed it to become instrumentalised, reflecting the technicist character of its practice