Financial Crisis and New Dimensions of Liquidity Risk: Rethinking Prudential Regulation and Supervision

This paper aims to stress the importance of market liquidity for the stability of the financial system, emphasizing the pivotal role played by liquidity risk in the development of the current financial crisis, pointing out the flaws of regulation and supervision and stressing the need for their reform. We first investigate the evolution of the concept of liquidity and the nexus between the transformations of financial systems and their increased vulnerability to liquidity risks. Then we focus on the causes of the emergence of liquidity risk in the ongoing financial crisis. We point out two intertwined processes: firstly, the huge increase in financial assets stemming from the shift to an \u201coriginate-to-distribute\u201d intermediation model; secondly, the growth of a parallel financial circuit. After this, we focus on the main lessons for regulation and supervision: first of all we address the case for adjustments to or reform of Basel 2 in view of the nexus between solvency and liquidity. Further crucial points relate to market liquidity and OTC markets, scale and scope of LLR function, architecture of supervisory authorities and perimeter of controls. Finally we stress the need for harmonization, or at least coordination, of national liquidity regimes, at least for cross-border group

How Does Financial Market Evaluate Business Models? Evidence From European Banks

This paper investigates the way in which the financial market defines and evaluates different business models/business mix, using a sample of listed European banking groups, with a total asset value greater than 50 billion US$, for the period 2006-2015. The main results suggest that non-interest components foster market valuation and that financial market seems to associate a better risk-return trade-off to non-banking fees compared to the banking ones. This evidence enables us to identify 3 clusters of European banking groups based on the main components of income. These findings have strategic implications both for bank managers, regulators and supervisors due to the impact of the crisis on banking business, bank profitability and riskiness and the new challenges they entail

Towns with extremely low mortality due to ischemic heart disease in Spain

BACKGROUND: The cause of coronary disease inframortality in Spain is unknown. The aim of this study is to identify Spanish towns with very low ischemic heart disease mortality, describe their health and social characteristics, and analyze the relationship with a series of contextual factors. METHODS: We obtained the number of deaths registered for each of 8,122 Spanish towns in the periods 1989-1998 and 1999-2003. Expected deaths, standardized mortality ratio (SMR), smoothed Relative Risk (RR), and Posterior Probability (PP) of RR > 1 were calculated using Bayesian hierarchical models. Inframortality was defined as any town that displayed an RR below the 10th percentile, an SMR of under 1 for both sexes, and a PP of RR > 1 less than or equal to 0.002 for male and 0.005 for female mortality, during the two periods covered. All the remaining towns, except for those with high mortality classified as "tourist towns", were selected as controls. The association among socioeconomic, health, dietary, lifestyle and vascular risk factors was analyzed using sequential mixed logistic regression models, with province as the random-effects variable. RESULTS: We identified 32 towns in which ischemic heart disease mortality was half the national rate and four times lower than the European Union rate, situated in lightly populated provinces spread across the northern half of Spain, and revealed a surprising pattern of geographic aggegation for 23 of the 32 towns. Variables related with inframortality were: a less aged population (OR 0.93, 95% CI 0.89-0.99); a contextual dietary pattern marked by a high fish content (OR 2.13, 95% CI 1.38-3.28) and wine consumption (OR 1.50, 95% CI 1.08-2.07); and a low prevalence of obesity (OR 0.47, 95% CI 0.22-1.01); and, in the case of towns of over 1000 inhabitants, a higher physician-population ratio (OR 3.80, 95% CI 1.17-12.3). CONCLUSIONS: Results indicate that dietary and health care factors have an influence on inframortality. The geographical aggregation suggests that other factors with a spatial pattern, e.g., genetic or environmental might also be implicated. These results will have to be confirmed by studies in situ, with objective measurements at an individual level.This study was funded by research study grant no. PI06/0656 from Spain's Health Research Fund (Fondo de Investigación Sanitaria).S

Come riconoscere la virosi del Pinot grigio (GPGV)

Dal 2012 è stata segnalata la presenza in Italia di un nuovo virus denominato GPGV (Grapevine Pinot gris Virus). Si tratta di una malattia complessa per la quale risulta fondamentale individuare metodi di analisi efficaci e capire le modalità di trasmission

Business model of banks and SSM

In recent years, Business Model analysis has become the conceptual framework used by regulators, analysts and investors in the attempt to identify a bank's main strategic behaviours and their implications in terms of competitiveness and possible future performance and stability. This interest follows the radical review and transformation of banks' strategies due to major changes to the competitive scenario in the financial industry, which affected their competitive positions and led to subsequent restructuring and strategic repositioning choices. From the point of view of banking supervision, the main regulatory reference for the analysis and assessment of banks' Business Models by the supervisory authorities is provided by the prudential regulation framework, mainly based on the Basel Accord on Capital Adequacy (Basel 3), with specific reference to Pillar II. In this case, the subject of proportionality becomes a relevant issue, since banks' Business Models have widely different degrees of complexity, which must be carefully considered for supervisory evaluation and SREP decision