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Showing results 1 to 10 of approximately 17.
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Working Paper
Embedded Supervision: How to Build Regulation into Blockchain Finance
The spread of distributed ledger technology (DLT) in finance could help to improve the efficiency and quality of supervision. This paper makes the case for embedded supervision, i.e., a regulatory framework that provides for compliance in tokenized markets to be automatically monitored by reading the market?s ledger, thus reducing the need for firms to actively collect, verify and deliver data. After sketching out a design for such schemes, the paper explores the conditions under which distributed ledger data might be used to monitor compliance. To this end, a decentralized market is modelled ...
Speech
Testimony on Exploring Financial Risks on Banking Posed by Climate Change
Testimony before the New York State Senate Committees on Banks, Finance, and Environmental Conservation (delivered via videoconference).
Speech
A Microprudential Perspective on the Financial Risks of Climate Change
Remarks at the 2020 Climate Risk Symposium, Global Association of Risk Professionals (delivered via videoconference).
Discussion Paper
Enhancing Monitoring of NBFI Exposure: The Case of Open-End Funds
Non-bank financial institutions (NBFIs) have grown steadily over the last two decades, becoming important providers of financial intermediation services. As NBFIs naturally interact with banking institutions in many markets and provide a wide range of services, banks may develop significant direct exposures stemming from these counterparty relationships. However, banks may be also exposed to NBFIs indirectly, simply by virtue of commonality in asset holdings. This post and its companion piece focus on this indirect form of exposure and propose ways to identify and quantify such ...
Discussion Paper
How Does Supervision Affect Bank Performance during Downturns?
Supervision and regulation are critical tools for the promotion of stability and soundness in the financial sector. In a prior post, we discussed findings from our recent research paper which examines the impact of supervision on bank performance (see earlier post How Does Supervision Affect Banks?). As described in that post, we exploit new supervisory data and develop a novel strategy to estimate the impact of supervision on bank risk taking, earnings, and growth. We find that bank holding companies (BHCs or “banks”) that receive more supervisory attention have less risky loan ...
Working Paper
Stressed Banks? Evidence from the Largest-Ever Supervisory Review
We study short-term and medium-term changes in bank risk-taking as a result of supervision, and the associated real effects. For identification, we exploit the European Central Bank's asset-quality review (AQR) in conjunction with security and credit registers. After the AQR announcement, reviewed banks reduce riskier securities and credit supply, with the greatest effect on riskiest securities. We find negative spillovers on asset prices and firm-level credit availability. Moreover, non-banks with higher exposure to reviewed banks acquire the shed risk. After the AQR compliance, reviewed ...
Speech
A Supervisory Perspective on the U.S. Banking System
Remarks at the Financial Times Global Banking Summit (delivered via videoconference).
Working Paper
Credit Ratings, Private Information, and Bank Monitoring Ability
In this paper, we use credit rating data from two large Swedish banks to elicit evidence on banks' loan monitoring ability. For these banks, our tests reveal that banks' internal credit ratings indeed include valuable private information from monitoring, as theory suggests. Banks' private information increases with the size of loans.
Working Paper
Stressed Banks? Evidence from the Largest-Ever Supervisory Review
We study short-term and medium-term changes in bank risk-taking as a result of supervision, and the associated real effects. For identification, we exploit the European Central Bank's asset-quality review (AQR) in conjunction with security and credit registers. After the AQR announcement, reviewed banks reduce riskier securities and credit supply, with the greatest effect on riskiest securities. We find negative spillovers on asset prices and firm-level credit availability. Moreover, non-banks with higher exposure to reviewed banks acquire the shed risk. After the AQR compliance, reviewed ...
Newsletter
Exploring Risks and Opportunities for Community Banks in an Improving Environment
The Tenth Annual Community Bankers Symposium, co-sponsored by the Federal Reserve Bank of Chicago, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, was held at the Chicago Fed on November 7, 2014. This article summarizes key presentations and discussions at the symposium.