Download or read book The Effects of Liquidity Regulation on Bank Assets and Liabilities written by Patty Duijm and published by . This book was released on 2017 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: Under Basel III rules, banks became subject to a liquidity coverage ratio (LCR) from 2015 onward, to promote short-term resilience. Investigating the effects of such liquidity regulation on bank balance sheets, we find (i) cointegration of liquid assets and liabilities, to maintain a short-term liquidity buffer; and (ii) that adjustment in the liquidity ratio is skewed towards the liability side. This finding contrasts with established wisdom that compliance with the LCR is mainly driven by changes in liquid assets. Moreover, microprudential regulation has not prevented a procyclical liquidity cycle in secured financing that is strongly correlated with leverage.
Download or read book Liquidity Ratios as Monetary Policy Tools Some Historical Lessons for Macroprudential Policy written by Eric Monnet and published by International Monetary Fund. This book was released on 2019-08-16 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper explores what history can tell us about the interactions between macroprudential and monetary policy. Based on numerous historical documents, we show that liquidity ratios similar to the Liquidity Coverage Ratio (LCR) were commonly used as monetary policy tools by central banks between the 1930s and 1980s. We build a model that rationalizes the mechanisms described by contemporary central bankers, in which an increase in the liquidity ratio has contractionary effects, because it reduces the quantity of assets banks can pledge as collateral. This effect, akin to quantity rationing, is more pronounced when excess reserves are scarce.
Download or read book Liquidity Risk Management in Banks written by Roberto Ruozi and published by Springer Science & Business Media. This book was released on 2012-09-20 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: The recent turmoil on financial markets has made evident the importance of efficient liquidity risk management for the stability of banks. The measurement and management of liquidity risk must take into account economic factors such as the impact area, the timeframe of the analysis, the origin and the economic scenario in which the risk becomes manifest. Basel III, among other things, has introduced harmonized international minimum requirements and has developed global liquidity standards and supervisory monitoring procedures. The short book analyses the economic impact of the new regulation on profitability, on assets composition and business mix, on liabilities structure and replacement effects on banking and financial products.
Download or read book Bank Liquidity Creation and Financial Crises written by Allen N. Berger and published by Academic Press. This book was released on 2015-11-24 with total page 296 pages. Available in PDF, EPUB and Kindle. Book excerpt: Bank Liquidity Creation and Financial Crises delivers a consistent, logical presentation of bank liquidity creation and addresses questions of research and policy interest that can be easily understood by readers with no advanced or specialized industry knowledge. Authors Allen Berger and Christa Bouwman examine ways to measure bank liquidity creation, how much liquidity banks create in different countries, the effects of monetary policy (including interest rate policy, lender of last resort, and quantitative easing), the effects of capital, the effects of regulatory interventions, the effects of bailouts, and much more. They also analyze bank liquidity creation in the US over the past three decades during both normal times and financial crises. Narrowing the gap between the "academic world" (focused on theories) and the "practitioner world" (dedicated to solving real-world problems), this book is a helpful new tool for evaluating a bank’s performance over time and comparing it to its peer group. Explains that bank liquidity creation is a more comprehensive measure of a bank’s output than traditional measures and can also be used to measure bank liquidity Describes how high levels of bank liquidity creation may cause or predict future financial crises Addresses questions of research and policy interest related to bank liquidity creation around the world and provides links to websites with data and other materials to address these questions Includes such hot-button topics as the effects of monetary policy (including interest rate policy, lender of last resort, and quantitative easing), the effects of capital, the effects of regulatory interventions, and the effects of bailouts
Download or read book Financial regulation through new liquidity standards and implications for institutional banks written by Ansgar Wittenbrink and published by GRIN Verlag. This book was released on 2011-05-18 with total page 88 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2011 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, University of Applied Sciences Essen, course: General economics, language: English, abstract: The global financial crisis which began in mid-2007 revealed the significant risks posed by large, complex and interconnected institutions and the fault-lines in the regulatory and oversight systems. The drying up of market liquidity caused lacks of funding for financial institutions and their reactions to the market stress increased the market tensions which highlighted the strong link between banks funding liquidity and market liquidity. Over the past two decades preceding the crisis, banks in advanced countries significantly expanded in size and increased their outreach globally. In many cases, they moved away from the traditional banking model towards globally active large and complex financial institutions. The majority of cross-border finance was intermediated by some of these institutions with growing interconnections within and across borders. The result were trends in the banking industry which include a sharp rise in leverage, significant reliance on short-term funding, significant off-balance sheet activities, maturity mismatches and increased share of revenues from complex products and trading activities. This development has moved on to a systematic risk and it has been identified a need in the financial sector to measure those aspects, to assess the resilience of the financial sector to liquidity shocks and give guidance to the policy of central banks and regulators. At the same time, the financial industry has started a fast process of consolidation worldwide. Regulators, organized in the Basel Committee on Banking Supervision (BCBS) have responded to the financial crisis by proposing new regulation which is known as “Basel III”. The reform program leads to fundamental changes and implements capital and liquidity reforms. The liquidity reform represents the first attempt by international regulators to introduce harmonized liquidity minimum standards for financial institutions. Extensive efforts through the Basel Committee, with the “Basel III” program, are being considered internationally and domestically to revise these deficiencies and failures, in order to safeguard the stability of the financial system. The key objective is to promote a less leveraged, less risky, and thus a more resilient financial system that supports strong and sustainable economic growth. The bulk of the proposals have focused on revising existing regulations applicable to financial institutions and to influence the extent and consequences of their risk taking.
Download or read book The Changing Fortunes of Central Banking written by Philipp Hartmann and published by Cambridge University Press. This book was released on 2018-03-29 with total page 423 pages. Available in PDF, EPUB and Kindle. Book excerpt: 22.3.1 Basic Characteristics
Download or read book Prudential Liquidity Regulation in Developing Countries written by Sarah Sanya and published by International Monetary Fund. This book was released on 2012-01-01 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyses the prudential liquidity management framework, in particular the quantitative indicators employed by the central bank of Rwanda in response to the domestic liquidity crisis in 2008/09. It emphasises that the quantitative methods used in the monitoring and assessment of systemic liquidity risk are inadequate because they did not signal the liquidity crises ex-post. There are quick gains to be made from augumenting the liquidity risk indicators with more dynamic liquidity stress tests so that compliance will be achieved through lengthening the maturities of both assets and liabilities on the balance sheet as opposed to simply holding more liquid assets. The paper recommends that policy emphasis shift toward reforms that strengthen systemic liquidity risk assesment, monetary policy implementation as well as improve the efficiency of Rwanda's financial system.
Download or read book Financial Regulation Through New Liquidity Standards and Implications for Institutional Banks written by Ansgar Wittenbrink and published by GRIN Verlag. This book was released on 2011-05 with total page 93 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2011 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, University of Applied Sciences Essen, course: General economics, language: English, abstract: The global financial crisis which began in mid-2007 revealed the significant risks posed by large, complex and interconnected institutions and the fault-lines in the regulatory and oversight systems. The drying up of market liquidity caused lacks of funding for financial institutions and their reactions to the market stress increased the market tensions which highlighted the strong link between banks funding liquidity and market liquidity. Over the past two decades preceding the crisis, banks in advanced countries significantly expanded in size and increased their outreach globally. In many cases, they moved away from the traditional banking model towards globally active large and complex financial institutions. The majority of cross-border finance was intermediated by some of these institutions with growing interconnections within and across borders. The result were trends in the banking industry which include a sharp rise in leverage, significant reliance on short-term funding, significant off-balance sheet activities, maturity mismatches and increased share of revenues from complex products and trading activities. This development has moved on to a systematic risk and it has been identified a need in the financial sector to measure those aspects, to assess the resilience of the financial sector to liquidity shocks and give guidance to the policy of central banks and regulators. At the same time, the financial industry has started a fast process of consolidation worldwide. Regulators, organized in the Basel Committee on Banking Supervision (BCBS) have responded to the financial crisis by proposing new regulation which is known as "Basel III". The reform program leads to fundamental changes and implements capital and liquidity reforms. The liquidity re
Download or read book Bank Funding Liquidity and Capital Adequacy written by José Gabilondo and published by Edward Elgar Publishing. This book was released on 2016-09-28 with total page 170 pages. Available in PDF, EPUB and Kindle. Book excerpt: Focusing primarily on the banking system in the United States, this book offers an innovative framework that integrates a depository bank’s liquidity and its capital adequacy into a unified notion of funding that helps to explain how the 2007–2008 crisis unfolded, why central banks succeeded in resolving the crisis, and how the conceptual legacy of the crisis and its resolution led to lasting changes in bank funding regulation, including new objective requirements for bank liquidity. To provide a comparative context, the book also examines the funding models of non-bank intermediaries like dealer banks and insurers.
Download or read book International Convergence of Capital Measurement and Capital Standards written by and published by Lulu.com. This book was released on 2004 with total page 294 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Effects of Bank Capital on Lending written by Joseph M. Berrospide and published by DIANE Publishing. This book was released on 2011-04 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: The effect of bank capital on lending is a critical determinant of the linkage between financial conditions and real activity, and has received especial attention in the recent financial crisis. The authors use panel-regression techniques to study the lending of large bank holding companies (BHCs) and find small effects of capital on lending. They then consider the effect of capital ratios on lending using a variant of Lown and Morgan's VAR model, and again find modest effects of bank capital ratio changes on lending. The authors¿ estimated models are then used to understand recent developments in bank lending and, in particular, to consider the role of TARP-related capital injections in affecting these developments. Illus. A print on demand pub.
Download or read book A Simple Macroprudential Liquidity Buffer written by Mr.Daniel C. Hardy and published by International Monetary Fund. This book was released on 2014-12-22 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: A mechanism is proposed that aims to reduce the risk of a banking sector liquidity crisis—which is a quintessentially systemic event and thus the object of macroprudential policy—and moderate the effects of a crisis should one occur. The instrument would give banks more incentive to build up buffers of systemically liquid assets as a proportion of their total liabilities, yet these buffers would be usable in times of stress. The modalities of the instrument are considered with a view to making it effective, efficient, and robust.
Download or read book Liquidity Risk Management written by Shyam Venkat and published by John Wiley & Sons. This book was released on 2016-03-28 with total page 309 pages. Available in PDF, EPUB and Kindle. Book excerpt: The most up-to-date, comprehensive guide on liquidity risk management—from the professionals Written by a team of industry leaders from the Price Waterhouse Coopers Financial Services Regulatory Practice, Liquidity Risk Management is the first book of its kind to pull back the curtain on a global approach to liquidity risk management in the post-financial crisis. Now, as a number of regulatory initiatives emerge, this timely and informative book explores the real-world implications of risk management practices in today's market. Taking a clear and focused approach to the operational and financial obligations of liquidity risk management, the book builds upon a foundational knowledge of banking and capital markets and explores in-depth the key aspects of the subject, including governance, regulatory developments, analytical frameworks, reporting, strategic implications, and more. The book also addresses management practices that are particularly insightful to liquidity risk management practitioners and managers in numerous areas of banking organizations. Each chapter is authored by a Price Waterhouse Coopers partner or director who has significant, hands-on expertise Content addresses key areas of the subject, such as liquidity stress testing and information reporting Several chapters are devoted to Basel III and its implications for bank liquidity risk management and business strategy Includes a dedicated, current, and all-inclusive look at liquidity risk management Complemented with hands-on insight from the field's leading authorities on the subject, Liquidity Risk Management is essential reading for practitioners and managers within banking organizations looking for the most current information on liquidity risk management.
Download or read book Managing Elevated Risk written by Iwan J. Azis and published by Springer. This book was released on 2014-12-11 with total page 129 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book discusses the risks and opportunities that arise in Emerging Asia given the context of a new environment in global liquidity and capital flows. It elaborates on the need to ensure financial and overall economic stability in the region through improved financial regulation and other policy measures to minimize the emergent risks. "Managing Elevated Risk: Global Liquidity, Capital Flows, and Macroprudential Policy—An Asian Perspective" also explores the range of policy options that may be deployed to address the impact of global liquidity on domestic financial and socio-economic conditions including income inequality. The book is primarily aimed at policy makers, financial market regulators and supervisory agencies to help them improve national regulatory systems and to promote harmonization of national regulations and practices in line with global standards. Scholars and researchers will also gain important information and knowledge about the overall impacts of changing global liquidity from the book.
Download or read book Measuring Systemic Risk Adjusted Liquidity SRL written by Andreas Jobst and published by International Monetary Fund. This book was released on 2012-08-01 with total page 70 pages. Available in PDF, EPUB and Kindle. Book excerpt: Little progress has been made so far in addressing—in a comprehensive way—the externalities caused by impact of the interconnectedness within institutions and markets on funding and market liquidity risk within financial systems. The Systemic Risk-adjusted Liquidity (SRL) model combines option pricing with market information and balance sheet data to generate a probabilistic measure of the frequency and severity of multiple entities experiencing a joint liquidity event. It links a firm’s maturity mismatch between assets and liabilities impacting the stability of its funding with those characteristics of other firms, subject to individual changes in risk profiles and common changes in market conditions. This approach can then be used (i) to quantify an individual institution’s time-varying contribution to system-wide liquidity shortfalls and (ii) to price liquidity risk within a macroprudential framework that, if used to motivate a capital charge or insurance premia, provides incentives for liquidity managers to internalize the systemic risk of their decisions. The model can also accommodate a stress testing approach for institution-specific and/or general funding shocks that generate estimates of systemic liquidity risk (and associated charges) under adverse scenarios.
Download or read book Liquidity Risk Measurement and Management written by Leonard Matz and published by Xlibris Corporation. This book was released on 2011-07-20 with total page 400 pages. Available in PDF, EPUB and Kindle. Book excerpt: Villains for the Great Meltdown of 2007-2008 seem plentiful. But the very concept of finding and punishing villains misses the target. Ideally, we learn from past failures. We perfect our craft. Lessons to be learned from the Great Meltdown are not just plentiful - they are also insightful. In LIQUIDITY RISK MEASUREMENT AND MANAGENT -- BASEL III AND BEYOND, Mr. Matz provides detailed, practical analysis and recommendations covering every aspect of liquidity risk measurement and management. * Examples of what went wrong are used extensively. * Best practices procedures are explained. * New regulatory guidance - both qualitative and quantitative, including Basel III - is discussed in detail.* Source material and examples from many countries are included.This is the "how to guide" for liquidity risk managers in financial institutions around the globe.
Download or read book Basel III Liquidity Regulation and Its Implications written by Mark Petersen and published by Business Expert Press. This book was released on 2014-05-07 with total page 132 pages. Available in PDF, EPUB and Kindle. Book excerpt: Liquidity involves the degree to which an asset can be bought or sold in the market without affecting its price. The 2007 to 2009 financial crisis was characterized by a decrease in liquidity and necessitated the introduction of Basel III capital and liquidity regulation in 2010. Inside, you’ll learn how such regulations are applied on a broad crosssection of countries in order to understand and demonstrate the implications of Basel III. This book summarizes the defining features of the Basel I, II, and III Accords and their perceived shortcomings, as well as the role of the Basel Committee on Banking Supervision (BCBS) in promulgating international banking regulation. Basel III quantifies liquidity risk by using the measures liquidity coverage ratio (LCR) and net stable funding ratio (NSFR). This book discusses approximation techniques that may be used to estimate these liquidity measures. Inside, the authors highlight the connections between liquidity creation and bank capital and provide you with the details of an investigation of the risks liquidity creation generates for banks. In addition, we consider the impact of the implementation of Basel III liquidity regulation on macroeconomic variables such as GDP, investment, inflation, consumption, income, savings, and employment.
