The recent financial crisis underscored the critical role of financial intermediaries and cast a searching spotlight on their prevailing incentive framework and governance structure. Serious gaps and weaknesses in these areas are now widely seen as contributing their own distinctive role in impairing the effectiveness of the financial system. Shortcomings in regulation itself may have been part of the problem. How can regulation and regulators best respond? The objective of this conference is to bring together leading academics to discuss recent research on the regulation of financial intermediaries with broader implications for practice and policy.
Conference on Financial Regulation
October 2–3, 2015
Featured Media Playlist
Friday, October 2
Arvind Krishnamurthy examines the behavior of credit spreads and their link to economic growth during financial crises. His findings suggest that the recessions that accompany financial crises are severe and protracted.
Is shadow banking vulnerable to self-fulfilling runs? Investors typically decide to withdraw simultaneously, making it challenging to identify self-fulfilling runs. Stéphane Verani presents work that exploits the contractual structure of funding agreement-backed securities offered by U.S. life insurers to institutional investors, finding that a run on U.S. life insurers during the summer of 2007 was partly due to self-fulfilling expectations.
João A. C. Santos investigates the incentive for banks to bias risk estimates reported to regulators. When compared to estimates of credit risk within loan syndicates, banks with less regulatory capital appear to report lower risk.
Saturday, October 3
Vikrant Vig investigates how the introduction of complex, model-based capital regulation affected credit risk of financial institutions, using insights from the staggered introduction of the model-based approach in Germany and a rich loan-level data set.