Publicação
The effectiveness of regulatory pressure in the context of the financial crisis
| Resumo: | Regulators had a relevant role in causing the 2007-09 financial crisis, triggering the need for the ongoing worldwide regulatory reforms. The main purpose of the present work is to contribute to the debate on regulatory reform through the provision of policy oriented research. The vastness of the subject renders detailed scrutiny impossible and therefore the focus was directed to two of the more relevant failures – the inadequacy of regulatory capital requirements and the (absence of) regulation of TBTF banks – and the respective regulatory response – the need for the regulatory imposition of capital buffers and the re-regulation of TBTF banks. The inability of regulatory pressure to force U.S. banks to build their capital buffers in a period of economic growth is consistent with the argument that banks entered the financial turmoil with an inadequate level of capital. This result justifies a significant innovation in the regulatory reforms underway through the imposition of capital conservation mechanisms. The analysis of the determinants of dividends also supports the Basel Committee initiative to impose constraints on dividend distribution policies as a discipline mechanism for the banks whose capital buffers fall within a range close to the minimum requirements. Worldwide efforts to reform financial regulation after the financial crisis also include significant attention to the design of specific rules directed towards TBTF banks. However there is no evidence of abnormal returns surrounding the FSB public announcement of a supranational list of TBTF banks, signalling that the identification of TBTF banks did not reduce the moral hazard problem. This work reveals the need for extensive empirical research to verify and ascertain the fragilities of the regulatory framework in place, and also to analyze the potential impact of the regulatory response to the crisis. Specific attention needs to be given to the role of regulatory pressure on bank behaviour. |
|---|---|
| Autores principais: | Abreu, José Filipe |
| Assunto: | Bank Bank regulation Regulatory pressure Financial crisis Banca Regulação Pressão reguladora Crise financeira |
| Ano: | 2012 |
| País: | Portugal |
| Tipo de documento: | tese de doutoramento |
| Tipo de acesso: | acesso restrito |
| Instituição associada: | ISCTE |
| Idioma: | inglês |
| Origem: | Repositório ISCTE |
| Resumo: | Regulators had a relevant role in causing the 2007-09 financial crisis, triggering the need for the ongoing worldwide regulatory reforms. The main purpose of the present work is to contribute to the debate on regulatory reform through the provision of policy oriented research. The vastness of the subject renders detailed scrutiny impossible and therefore the focus was directed to two of the more relevant failures – the inadequacy of regulatory capital requirements and the (absence of) regulation of TBTF banks – and the respective regulatory response – the need for the regulatory imposition of capital buffers and the re-regulation of TBTF banks. The inability of regulatory pressure to force U.S. banks to build their capital buffers in a period of economic growth is consistent with the argument that banks entered the financial turmoil with an inadequate level of capital. This result justifies a significant innovation in the regulatory reforms underway through the imposition of capital conservation mechanisms. The analysis of the determinants of dividends also supports the Basel Committee initiative to impose constraints on dividend distribution policies as a discipline mechanism for the banks whose capital buffers fall within a range close to the minimum requirements. Worldwide efforts to reform financial regulation after the financial crisis also include significant attention to the design of specific rules directed towards TBTF banks. However there is no evidence of abnormal returns surrounding the FSB public announcement of a supranational list of TBTF banks, signalling that the identification of TBTF banks did not reduce the moral hazard problem. This work reveals the need for extensive empirical research to verify and ascertain the fragilities of the regulatory framework in place, and also to analyze the potential impact of the regulatory response to the crisis. Specific attention needs to be given to the role of regulatory pressure on bank behaviour. |
|---|