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Special Issue "The Future of Banking Regulation and Financial Stability"

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A special issue of International Journal of Financial Studies (ISSN 2227-7072).

Deadline for manuscript submissions: closed (30 November 2014)

Special Issue Editor

Guest Editor
Prof. Dr. Angelos A. Antzoulatos (Website)

Department of Banking and Financial Management, University of Piraeus, Piraeus 18534, Greece
Interests: banking; financial crises; financial stability

Special Issue Information

Dear Colleagues,

The recent global financial crisis has brought to the fore several issues pertaining to regulation, supervision and the interactions of all players in the markets, including national governments. Moreover, the response to the crisis has reignited old policy debates, albeit in a different context – that of prudential regulation/supervision and financial fragility.

Indicatively, the ‘failure’ of quantitative risk-assessment models to predict the extensive fragility in the period leading up to the crisis has led to the adoption (in Basel III) of simpler quantitative rules and to the strengthening of regulatory discretion (in the form, say, of counter-cyclical buffers). What lessons might be drawn from the policy debates of the late 1970s on ‘Rules vs. Discretion’?

Also, the rapid metastasis of risks, say, from liquidity to credit/asset via the forced sales of assets and the deterioration of overall economic conditions, has raised the issue of whether simple and transparent rules, which help stabilize expectations in cases of fragility, are preferable to complicated rules. Is ‘fine-tuning’ in risk management, as that implied by complicated quantitative rules about capital adequacy, liquidity and operational risk – among others, feasible? Desirable? And under what conditions pertaining to the economic environment and the institutional and legal infrastructure?

Last but not least, the huge fiscal burden, from bank recapitalization and the recession caused by the crisis, raises the issue of whether supervision can (or should) be independent from fiscal policy. What lessons might be drawn from the extensive literature on central bank independence?

Indicative topics:

  1. Interaction of risks, regulations and incentives: Does Basel III go far enough to address perverse incentives and the pertinent negative externalities?
  2. Institutional and legal infrastructure needed for Basel III
  3. Simple rules vs. Complicated rules: ‘Fine-tuning’ in a turbulent economic environment
  4. Feedback loops between regulation/supervision and banking risks
  5. Strict rules (no discretion) and lenient application vs. Lenient rules (with discretion) and strict application
  6. Rules vs. Discretion and the ‘Time-inconsistency Problem’
  7. Micro vs. Macro prudential regulation: Which is best, in normal times? in turbulent times?
  8. Financial fragility: Treating the symptoms (focusing on resolution regimes) or the disease (focusing on prevention)?
  9. Basel III and Banking Union in the EU
  10. Lessons from past crises and from the theoretical literature on banking crises.

Prof. Dr. Angelos A. Antzoulatos
Guest Editor

Submission

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. Papers will be published continuously (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are refereed through a peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. International Journal of Financial Studies is an international peer-reviewed Open Access quarterly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. For the first couple of issues the Article Processing Charge (APC) will be waived for well-prepared manuscripts. English correction and/or formatting fees of 250 CHF (Swiss Francs) will be charged in certain cases for those articles accepted for publication that require extensive additional formatting and/or English corrections.

Keywords

  • regulation
  • supervision
  • Basel III
  • rules vs. discretion
  • time inconsistency problem
  • supervision and economic policy coordination
  • micro prudential regulation
  • macro prudential regulation
  • financial fragility
  • european banking union

Published Papers (3 papers)

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Research

Open AccessArticle Financial Stability Board: Mandate and Implementation of Its Systemic Risks Standards
Int. J. Financial Stud. 2014, 2(1), 82-102; doi:10.3390/ijfs2010082
Received: 3 December 2013 / Revised: 13 January 2014 / Accepted: 7 February 2014 / Published: 28 February 2014
PDF Full-text (126 KB) | HTML Full-text | XML Full-text
Abstract
The aim of this essay is to provide an overview of the Financial Stability Board’s (FSB) mandate and tools to safeguard financial stability and reduce systemic risks based on the methodological perspective of a legal analysis. It examines some of the recommendations [...] Read more.
The aim of this essay is to provide an overview of the Financial Stability Board’s (FSB) mandate and tools to safeguard financial stability and reduce systemic risks based on the methodological perspective of a legal analysis. It examines some of the recommendations that the FSB has published, with the aim of enhancing financial stability. In the second part of the paper, the complex problems that arise from implementing soft law recommendations, and the discretion granted to regulatory authorities, are discussed. Full article
(This article belongs to the Special Issue The Future of Banking Regulation and Financial Stability)
Open AccessArticle Credibility and Crisis Stress Testing
Int. J. Financial Stud. 2014, 2(1), 15-81; doi:10.3390/ijfs2010015
Received: 4 September 2013 / Revised: 30 December 2013 / Accepted: 21 January 2014 / Published: 17 February 2014
Cited by 3 | PDF Full-text (861 KB) | HTML Full-text | XML Full-text
Abstract
Credibility is the bedrock of any crisis stress test. The use of stress tests to manage systemic risk was introduced by the U.S. authorities in 2009 in the form of the Supervisory Capital Assessment Program. Since then, supervisory authorities in other jurisdictions [...] Read more.
Credibility is the bedrock of any crisis stress test. The use of stress tests to manage systemic risk was introduced by the U.S. authorities in 2009 in the form of the Supervisory Capital Assessment Program. Since then, supervisory authorities in other jurisdictions have also conducted similar exercises. In some of those cases, the design and implementation of certain elements of the framework have been criticized for their lack of credibility. This paper proposes a set of guidelines for constructing an effective crisis stress test. It combines financial markets impact studies of previous exercises with relevant case study information gleaned from those experiences to identify the key elements and to formulate their appropriate design. Pertinent concepts, issues and nuances particular to crisis stress testing are also discussed. The findings may be useful for country authorities seeking to include stress tests in their crisis management arsenal, as well as for the design of crisis programs. Full article
(This article belongs to the Special Issue The Future of Banking Regulation and Financial Stability)
Open AccessArticle Bank Regulation in Dollarized Economies: The Case of Turkey
Int. J. Financial Stud. 2013, 1(4), 137-153; doi:10.3390/ijfs1040137
Received: 16 September 2013 / Revised: 17 October 2013 / Accepted: 30 October 2013 / Published: 13 November 2013
Cited by 1 | PDF Full-text (268 KB) | HTML Full-text | XML Full-text
Abstract
Regulators in emerging markets are increasingly curtailing the practice of foreigncurrency lending. In such a move Turkish regulatory authorities banned foreign currencylending to households in 2009. This paper examines the evolution of financial dollarization inTurkey in the 2002–2009 period by looking the [...] Read more.
Regulators in emerging markets are increasingly curtailing the practice of foreigncurrency lending. In such a move Turkish regulatory authorities banned foreign currencylending to households in 2009. This paper examines the evolution of financial dollarization inTurkey in the 2002–2009 period by looking the currency composition of loans and deposits inthe banking system and the macroeconomic developments. We find that the Turkish bankingsystem was unhedged against currency fluctuations and the regulators acted preemptively inbanning the practice. Full article
(This article belongs to the Special Issue The Future of Banking Regulation and Financial Stability)

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