This paper presents a novel approach to investigate and model the network of euro area banks’ large exposures within the global banking system. Drawing on a unique dataset, the paper documents the degree of interconnectedness and systemic risk of the euro area banking system based on bilateral linkages. We develop a Contagion Mapping model fully calibrated with bank-level data to study the contagion potential of an exogenous shock via credit and funding risks. We find that tipping points shifting the euro area banking system from a less vulnerable state to a highly vulnerable state are a non-linear function of the combination of network structures and bank-specific characteristics.
We present a model in which shadow banking arises endogenously and undermines market discipline on traditional banks. Depositors' ability to re-optimize in response to crises imposes market discipline on traditional banks: these banks optimally commit to a safe portfolio strategy to prevent early withdrawals. With costly commitment, shadow banking emerges as an alternative banking strategy that combines high risk-taking with early liquidation in times of crisis. We bring the model to bear on the 2008 financial crisis in the United States, during which shadow banks experienced a sudden dry-up of funding and liquidated their assets. We derive an equilibrium in which the shadow banking sector expands to a size where its liquidation causes a fire-sale and exposes traditional banks to liquidity risk. Higher deposit rates in compensation for liquidity risk also weaken threats of early withdrawal and traditional banks pursue risky portfolios that may leave them in default. Policy interventions aimed at making traditional banks safer such as liquidity support, bank regulation and deposit insurance fuel further expansion of shadow banking but have a net positive impact on financial stability. Financial stability can also be achieved with a tax on shadow bank profits.
We present a model in which shadow banking arises endogenously and undermines market discipline on traditional banks. Depositors' ability to re-optimize in response to crises imposes market discipline on traditional banks: these banks optimally commit to a safe portfolio strategy to prevent early withdrawals. With costly commitment, shadow banking emerges as an alternative banking strategy that combines high risk-taking with early liquidation in times of crisis. We bring the model to bear on the 2008 financial crisis in the United States, during which shadow banks experienced a sudden dry-up of funding and liquidated their assets. We derive an equilibrium in which the shadow banking sector expands to a size where its liquidation causes a fire-sale and exposes traditional banks to liquidity risk. Higher deposit rates in compensation for liquidity risk also weaken threats of early withdrawal and traditional banks pursue risky portfolios that may leave them in default. Policy interventions aimed at making traditional banks safer such as liquidity support, bank regulation and deposit insurance fuel further expansion of shadow banking but have a net positive impact on financial stability. Financial stability can also be achieved with a tax on shadow bank profits.
This paper presents a novel approach to investigate and model the network of euro area banks’ large exposures within the global banking system. Drawing on a unique dataset, the paper documents the degree of interconnectedness and systemic risk of the euro area banking system based on bilateral linkages. We develop a Contagion Mapping model fully calibrated with bank-level data to study the contagion potential of an exogenous shock via credit and funding risks. We find that tipping points shifting the euro area banking system from a less vulnerable state to a highly vulnerable state are a non-linear function of the combination of network structures and bank-specific characteristics.
Why do some countries have 'Culture Wars' over morality issues such as abortion and same-sex marriage while other countries hardly experience any conflict? This book argues that morality issues only generate major conflicts in political systems with a significant conflict between religious and secular parties.
The European Fall is an anthology that charts the mental consequences of the economic and political crisis that Europe is going through. It consists of 28 essays - one from each EU-country, written by leading intellectuals of the continent. Agnes Heller (Hungary), Gazmend Kapplani (Greece), Marlene Streeruwitz (Austria), Jose-Ignacio Torresblanca (Spain), Varia Vike-Freiberga (Latvia), Tariq Ali (GB), Slavenka Draculic (Kroatia), Stefano Benni (Italy), Martin Simecka (Slovakia), Olga Tocarczuk (Poland), Marju Lauristin (Estonia), Landsbergis (Lithuania), Janne Teller (Denmark), Tuomas Nevanlinna (Finland), Nina Bjørk (Sweeden), Stojan Pelko (Slovenia), Ivan Krastev (Bulgaria), Geert van Istendael (Belgium), Christine Ockrant (France), Claude Frisoni (Luxembourg), Colm Tobin (Ireland), Andreas Theophanous (Cypres), Vanni Xuereb (Malta), Claes Vreese (Holland), Ioana Pavulescu (Rumania), Radka Danimarkova (Czech Republic), Almeida Faria (Portugal)
This volume was developed from the proceedings of a symposium held in Miami Beach, at the 189th National Meeting of the American Chemical Society.It is the result of the combined efforts of many experts whose efforts have advanced our knowledge of the production, analysis, distribution, effects and control of chlorinated dioxins, dibenzofurans and related compounds.This is the third in a series of publications originating from current technology presented at national meetings of the American Chemical Society. Using this forum as a catalyst, researchers from all over the world came together to present and discuss their data and plan future work in this rapidly developing and sometimes highly emotional technical area.
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