This paper constructs a theoretical model to examine the LOLR policy when a central bank can imperfectly screen insolvent from solvent banks. We find that: (1) Central bank screening produces a “positive” stigma associated with central bank borrowing by punishing insolvent banks. (2) With central bank screening, the LOLR policy in fact reduces moral hazard rather than inducing it. (3) If the central

The use of financial technologies (FinTech) by financial market participants fostered a discussion among public authorities on the use technologies for regulatory (RegTech) and supervisory (SupTech) purposes. This paper discusses the application of innovative technologies to crisis resolution (ResTech) and sets out its potential scope of application. ResTech is the application of technologies: i) to

This paper proposes a process for developing a comprehensive policy life-cycle management (PLM) framework that institutionalises the essential elements of regulatory policy life-cycle implementation. Central banks face challenges during the life-cycle processes of regulatory policy management. The evident reasons for some of these challenges are missing significant policy quality attributes (PQAs)

This study proposes a taxonomy for asset management companies to facilitate conceptualization, classification, and measurement. Accordingly, the study qualitatively analyzes variations in the types of assets transferred to asset management companies, the transfer pricing mechanism, and the extent of risk conveyance. The study uses a cross-country setting to analyze differences in corporate structure

In this paper, we expand the scarce literature regarding the effects of ownership structure and board composition on market measures of banks’ systemic risk. Based on a sample of 87 European banks over the period 2010–2016, we provide evidence that ownership concentration has a non-monotonic (inverted u-shape) relationship with systemic risk. Additionally, we find that board characteristics (board

This study seeks to examine the level of transparency of remuneration policy in financial holding companies (FHCs) using the example of the UniCredit Group, as well as to identify the factors that affect its level. It will also indicate to what extent international recommendations on remuneration policy transparency have been implemented into national legal regulations and codes of best practice. Using

This paper develops a framework of assessing de jure adoption of Sharīʿah governance standards of international standards setting bodies and uses it to assess the legal and regulatory framework of Sharīʿah governance regimes (SGR). Using leximetrics and content analysis, the framework is used to assess SGR in four countries (Kuwait, Malaysia, Pakistan and UAE) in an objective manner. The results show

The purpose of this paper is to assess the effectiveness of the transitional provisions for the impact of International Financial Reporting Standard 9 (IFRS 9) as a supervisory tool to strengthen a bank’s capital base. The new IFRS 9 provisions are a significant banking supervisory measure of the so-called Capital Requirements Regulation (CRR) Quick Fix to mitigate possible adverse effects of the COVID-19

Since the global financial crisis, banking regulations have become more stringent and complex. In particular, capital and liquidity adequacy requirements have been discussed extensively in various contexts. This study constructs a general equilibrium model that incorporates banks and households that hold both liquid and illiquid assets to compare the economic effects of capital and liquidity adequacy

As a major electronic alternative to cash, central banks and state administrations often support the development of card payments with regulatory and public policy steps. Hungary was extremely active in this field by executing POS-terminal installation programmes or setting limits to interchange fees a year before the European regulation. Within this study we investigate, how these measures contributed

We examine the impact of board structure, CEO power and other bank-specific factors on bank risk-taking for a sample of 72 publicly listed European banks in both stable and crisis periods. Using a simultaneous equations approach, our main findings indicate that the proportion of independent directors, the board size, and Chief Executive Officer (CEO) power affected bank risk-taking negatively during

The emergence of risk-based capital regulation that is allowing banks to use their internal risk models for regulatory purposes was among the main regulatory developments prior to the financial crisis. During the crisis, it became evident these models underestimated the level of risk. The post-crisis regulatory approach brought a reversal of policy by significantly reducing the scope of risk-based

This paper is motivated by the ongoing debate about the Basel III impact on the efficient functioning of the banking sector. We empirically examine the effect that the implementation of the net stable funding ratio has on real economy. Using data from the EU banking sector, we conduct a retrospective analysis by simulating and investigating historically the NSFR index and its role in the implementation

A considerable number of companies focus solely on maximizing their profit and give less or almost no concern about environmental sustainability and protection. Financial institutions being a part of these developmental entities tend to play a crucial role in economies' development and sustainability due to their intermediary role between economies and the investing industries. Despite the belief that

This paper aims at highlighting the significance of banking regulations for the determination of bank performance (financial and risk management). From the World Bank data set, eight factors of regulatory guidelines (entry barriers, the permissibility of activities, deposit insurance scheme, capital requirement, information disclosure, supervision, external monitoring, and governance structure) across

Countries around the world are working hard to fight against the economic crisis caused by the coronavirus pandemic, with a special emphasis on small- and medium-sized enterprises (SMEs) due to their vulnerability and importance in the business ecosystem. This paper analyzes the Spanish guarantee model and the measures taken by regional governments in conjunction with the main mutual guarantee societies

This paper asks: What are the factors that affect the recruitment sources of the two most senior management functions in banks—the board chairperson and the chief executive officer? Prior research has focused on the factors affecting the recruitment sources of senior management in corporations in general and has accorded less attention to banks. Therefore, research thus far has not fully accounted

This article examines the current Indonesian Financial Service Authority (IFSA) regulations on corporate governance that deal with the relevance, concept, and application of the stakeholder model in the Indonesian banking sector. This study shows that the current IFSA regulations on corporate governance in the Indonesian banking sector encourage the application of the stakeholder model. However, they

The volume and complexity of financial regulations have increased significantly since the 2008 financial crisis. This has put increasing pressure on banks to monitor and report a range of intricate exposures to comply with new prudential requirements. Regulatory Technology (RegTech) is an emerging technology trend leveraging information technology and digital innovations that can greatly assist with

After the subprime crisis, with the worsening of asset quality all around Europe, a lack of harmonization emerged concerning credit classification, monitoring, provisioning and writing-off in the banking industry. A wave of analysis and new regulations by the Supervising Authorities aimed at highlighting best practices and creating a common standard, in order to enhance transparency and accounting

Using a sample of 197 commercial banks operating in the MENA region, this paper examines the impact of competition on bank profitability and risk-taking, during the period 2011–2018. To assess competition, we have used both market structure-based and non-market structure-based indicators. Results indicate that competition would impact differently banks’ profitability and risk-taking. On the one hand

The volume and complexity of financial regulations have increased significantly since the 2008 financial crisis. This has put increasing pressure on banks to monitor and report a range of intricate exposures to comply with new prudential requirements. Regulatory Technology (RegTech) is an emerging technology trend leveraging Information Technology and Digital Innovations that can greatly assist with

AnaCredit is a multi-purpose shared data set containing loan-by-loan information on credit extended by credit institutions to companies and other legal entities, and it is conceived primarily as a common granular analytical credit database, shared between the Eurosystem members and comprising input data from all Member States whose currency is the euro; AnaCredit is open to non-euro Member States.

Fee business lines are often considered more volatile than loan business and characterized by an unfavourable risk–return trade-off. However, using FDIC samples from 2001 to 2016, we find that non-interest income still contributes positively to the performance of US banks—without impairing their solvability. On the one hand, our portfolio analysis suggests that the Big 4 seem to benefit from non-interest

Loan loss provisioning is a key bank accounting practice that directly influences banks’ earnings and reflects the risk attributes of banks’ loan portfolios. Bank managers can record a loan loss provision that deviates from one that is notionally correct in order to obscure information on banks’ performance and riskiness, thus elevating information uncertainty among investors. The difference between

Risk disclosure is a crucial factor in enhancing the efficiency of financial markets and promoting financial stability. This paper proposes a methodological tool to analyze credit risk disclosure in bank financial reports, based on the content analysis framework. The authors also uses this methodology to carry out an empirical study on a small sample of large Italian banks. The paper provides preliminary

After the Global Financial Crisis, the usage of capital controls and macroprudential policies has returned and becomes an essential element of the policy paradigm in different countries. However, our knowledge on the effectiveness of these policy instruments is still insufficient and requires serious empirical reconsideration. The main contribution of our paper is in identifying that capital controls

There has been a substantial build-up of non-performing assets in the Indian banking sector. Despite multiple initiatives and regulatory changes, there is a need to revisit the reporting and regulatory frameworks and redefine the focus areas. Banks credit problem has often been explored under the lens of asymmetric information. Spreads are generally directly proportional to probability of default and

The traditional model of systematic amortization over its useful life was replaced by the annual application of an impairment test, with the intention of correcting the problems of the lack of relevance and difficulty in estimating said useful life of the previous regulatory framework. The aim of this study is to investigate whether the application of the impairment test between 2005 and 2015 in the

As a result of the last financial crisis, the problem of Too big to fail (TBTF) escalated in many countries, among which in Germany. The complexity and volume of the investment activity run by many banks caused liquidity problems which threaten their further operations. Therefore, in order to stabilize the financial market, the countries were forced to dedicate significant public resources to save

We analyse the effectiveness of financial reforms in the transition economy of Vietnam, from the early years until the present day. Our focus is on the changes and the determinants of banks cost efficiency, which was widely criticised and was the focus of the reforms package. We find that regulatory changes impact favourably the development of the sector. Technological and efficiency improvements characterise

The collapse of the global financial industry in 2008 and the subsequent decay of most Western economies into a period of prolonged economic stagnation have represented a springboard for the progressive growth of alternative channels of financial intermediation. The reluctance and inability of mainstream banks in the post-crisis years to provide credit facilities to the real economy, most critically

In this paper, we argue that the current standard process of model validation can itself be seen as a model and that the quantification of model risk is very often built upon additional assumptions, which results into an infinite regress. Therefore, model validation in its current form does not constitute an endpoint of the critical examination of all models in use by a financial institution. We will