83 research outputs found
Strategic responses to global challenges: The case of European banking, 1973–2000
In applying a strategy, structure, ownership and performance (SSOP) framework to three major clearing banks (ABN AMRO, UBS, Barclays), this article debates whether the conclusions generated by Whittington and Mayer about European manufacturing industry can be applied to the financial services sector. While European integration plays a key role in determining strategy, it is clear that global factors were far more important in determining management actions, leading to significant differences in structural adaptation. The article also debates whether this has led to improved performance, given the problems experienced with both geographical dispersion and diversification, bringing into question the quality of decision-making over the long term
On the Computational Complexity of Measuring Global Stability of Banking Networks
Threats on the stability of a financial system may severely affect the
functioning of the entire economy, and thus considerable emphasis is placed on
the analyzing the cause and effect of such threats. The financial crisis in the
current and past decade has shown that one important cause of instability in
global markets is the so-called financial contagion, namely the spreading of
instabilities or failures of individual components of the network to other,
perhaps healthier, components. This leads to a natural question of whether the
regulatory authorities could have predicted and perhaps mitigated the current
economic crisis by effective computations of some stability measure of the
banking networks. Motivated by such observations, we consider the problem of
defining and evaluating stabilities of both homogeneous and heterogeneous
banking networks against propagation of synchronous idiosyncratic shocks given
to a subset of banks. We formalize the homogeneous banking network model of
Nier et al. and its corresponding heterogeneous version, formalize the
synchronous shock propagation procedures, define two appropriate stability
measures and investigate the computational complexities of evaluating these
measures for various network topologies and parameters of interest. Our results
and proofs also shed some light on the properties of topologies and parameters
of the network that may lead to higher or lower stabilities.Comment: to appear in Algorithmic
Investment Opportunity Set, Product Mix, and the Relationship between Bank CEO Compensation and Risk-Taking
Debt, R&D Investment and Technological Progress: A Panel Study of Japanese Manufacturing Firms in the 90s
Bank Leverage Ratios and Financial Stability: A Micro- and Macroprudential Perspective
Lender of last resort, buyer of last resort, and a fear of fire sales in the sovereign bond market*
We document the mechanism through which the risk of fire sales in the sovereign bond market contributed to the effectiveness of two major central bank interventions designed to restore financial stability during the European sovereign debt crisis. As a lender of last resort via the long-term refinancing operations (LTROs), the European Central Bank (ECB) improved the collateral value of sovereign bonds of peripheral countries. This resulted in an elevated concentration of these bonds in the portfolios of domestic banks, increasing fire-sale risk and making both banks and sovereign bonds riskier. In contrast, the ECB's announcement of being a potential buyer of last resort via the Outright Monetary Transaction (OMT) program attracted new investors and reduced fire-sale risk in the sovereign bond market
Do Bank Failures Affect Real Economic Activity? State-Level Evidence from the Pre-Depression Era
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