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Keywords:too big to fail 

Discussion Paper
Do Big Banks Have Lower Operating Costs?

Despite recent financial reforms, there is still widespread concern that large banking firms remain ?too big to fail.? As a solution, some reformers advocate capping the size of the largest banking firms. One consideration, however, is that while early literature found limited evidence for economies of scale, recent academic research has found evidence of scale economies in banking, even for the largest banking firms, implying that such caps could impose real costs on the economy. In our contribution to the volume on large and complex banks, we extend this line of research by studying the ...
Liberty Street Economics , Paper 201404325a

Discussion Paper
Introducing a Series on Large and Complex Banks

The chorus of criticism levied against mega-banks has, in some cases, outrun the research needed to back the criticism. To help the research catch up with the rhetoric, financial economists here at the New York Fed have engaged in a systematic study of the economics of large and complex banks and their resolution in the event of failure. The result of those efforts is a collection of eleven papers, each of which was subject to review (internal and external). The papers are now online in our Economic Policy Review. Today, we begin a two-week series of posts that present the key findings of ...
Liberty Street Economics , Paper 201404325b

Global financial stability - the road ahead

Remarks at the Tenth Asia-Pacific High Level Meeting on Banking Supervision, Auckland, New Zealand
Speech , Paper 130

Remarks on the panel Financial Regulation Nine Years on from the GFC – Where Do We Stand? at the G30’s 76th plenary session at the Federal Reserve Bank of New York, New York City

Remarks on the panel Financial Regulation Nine Years on from the GFC ? Where Do We Stand? at the G30?s 76th plenary session at the Federal Reserve Bank of New York, New York City.
Speech , Paper 229

Opening remarks at the Workshop on Reforming Culture and Behavior in the Financial Services Industry.

Remarks at the Workshop on Reforming Culture and Behavior in the Financial Services Industry, Federal Reserve Bank of New York, New York City.
Speech , Paper 148

Resolving “Too Big to Fail”

Using a synthetic control research design, we find that ?living will? regulation increases a bank?s annual cost of capital by 22 basis points, or 10 percent of total funding costs. This effect is stronger in banks that were measured as systemically important before the regulation?s announcement. We interpret our findings as a reduction in ?too big to fail? subsidies. The size of this effect is large: a back-of-the-envelope calculation implies a subsidy reduction of $42 billion annually. The impact on equity costs drives the main effect. The impact on deposit costs is statistically ...
Staff Reports , Paper 859

Discussion Paper
Resolving \\"Too Big to Fail\\"

Many market participants believe that large financial institutions enjoy an implicit guarantee that the government will step in to rescue them from potential failure. These ?Too Big to Fail? (TBTF) issues became particularly salient during the 2008 crisis. From the government?s perspective, rescuing these financial institutions can be important to avoid harm to the financial system. The bailouts also artificially lower the risk borne by investors and the financing costs of big banks. The Dodd-Frank Act attempts to remove the incentive for governments to bail out banks in the first place by ...
Liberty Street Economics , Paper 20181002

Panel remarks at the Clearing House annual conference

Remarks at The Clearing House Annual Conference, New York City.
Speech , Paper 187

Bank Complexity, Governance, and Risk

Bank holding companies (BHCs) can be complex organizations, conducting multiple lines of business through many distinct legal entities and across a range of geographies. While such complexity raises the costs of bank resolution when organizations fail, the effect of complexity on BHCs’ broader risk profiles is less well understood. Business, organizational, and geographic complexity can engender explicit trade-offs between the agency problems that increase risk and the diversification, liquidity management, and synergy improvements that reduce risk. The outcomes of such trade-offs may ...
Staff Reports , Paper 930

Working Paper
The Interplay Among Financial Regulations, Resilience, and Growth

Interconnectedness has been an important source of market failures, leading to the recent financial crisis. Large financial institutions tend to have similar exposures and thus exert externalities on each other through various mechanisms. Regulators have responded by putting more regulations in place with many layers of regulatory complexity, leading to ambiguity and market manipulation. Mispricing risk in complex models and arbitrage opportunities through regulatory loopholes have provided incentives for certain activities to become more concentrated in regulated entities and for other ...
Working Papers , Paper 18-9



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