The Elephant in the Room: The Need to Deal with What Banks Do*

Blundell‐Wignall, Adrian; Wehinger, Gert; Slovik, Patrick

doi:10.4135/9788132114024.n13

Cited by 11 publications

(15 citation statements)

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“…In addition, no Australian or Canadian banks needed government recapitalisation throughout the GFC. By contrast, as at October 2009, the UK government had spent US$81 billion on recapitalisation and the US government spent US$806 billion on recapitalising banks (Blundell-Wignall et al, 2009). 5 Most of the banks that experienced intervention by the public authorities during the GFC focused heavily on mortgage finance or structured finance (Honohan, 2008).…”

Section: International Comparison Of Financial Regulationmentioning

confidence: 97%

“…It was difficult to measure because these institutions were not obliged to report on their off-balance sheet activities, but it is reflected in the growth in securitised debt markets (see Figure 8.2). Regulatory changes in 2004, which allowed US investment banks to be supervised on a consolidated basis, led to a jump in leverage that was associated with increased purchases of credit securities (Blundell-Wignall et al, 2009).…”

Section: Institutional Investment Regulation and The Global Financiamentioning

confidence: 99%

“…That is, they followed a 'traditional' banking model where deposits fund loans, rather than using wholesale funding to finance various debt securities. Banks like Westpac and Santander avoided the large losses suffered by most banks (Blundell-Wignall et al, 2009).…”

Section: International Comparison Of Financial Regulationmentioning

confidence: 99%

“…Credit defaults outstanding(Blundell-Wignall et al, 2009) Note: Notional amounts are all the debt exposure covered. Gross market values on the righthand side refer to how much money would actually change hands after netting if derivatives were sold on the reporting date at prevailing market prices.…”

mentioning

confidence: 99%

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The Financial Crisis

Arestis¹,

Sobreira²,

Oreiro³

2011

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Section: International Comparison Of Financial Regulationmentioning

confidence: 97%

Section: Institutional Investment Regulation and The Global Financiamentioning

confidence: 99%

Section: International Comparison Of Financial Regulationmentioning

confidence: 99%

mentioning

confidence: 99%

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The Financial Crisis

Arestis¹,

Sobreira²,

Oreiro³

2011

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“…deal with the debt when it was pushed too far and the business failed. 2 See: Blundell-Wignall (2007a;b); Blundell- Wignall and Atkinson (2008;; and Blundell-Wignall, Wehinger and Slovik (2009). 3 See table 2.1, ISDA (2012) 4 This is based on a recovery rate of 50 per cent, a discount rate of 6 per cent, a premium of 4 per cent, and a notional of 100m.…”

mentioning

confidence: 99%

The Business Models of Large Interconnected Banks and the Lessons of the Financial Crisis

Blundell‐Wignall¹,

Atkinson²,

Roulet³

2012

Natl. Inst. econ. rev.

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This paper looks at the urgent and ongoing need to change the business models of global systemically important banks — particularly those that dominate the OTC derivatives markets which carry massive counterparty risk via collateralisation practices. It explores the three main lessons of the financial crisis: too big to fail, excess leverage and conflicts of interest. While regulatory reforms have been plentiful, none have adequately addressed the main source of the problems which lie in the very nature of the business models of large interconnected banks.

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The IMF's Rethink of Global Banks: Critical in Theory, Orthodox in Practice

Gabor

2014

Governance

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The International Monetary Fund's (IMF) new financial interconnectedness agenda, developed in response to postcrisis calls from G20 to better understand systemic financial institutions, deploys a critical approach that stresses the spatial, political, and institutional dimensions of cross‐border financial networks. It portrays global banks as key nodes in those networks, “super‐spreaders” of systemic risk through complex business models that involve yield search, regulatory and tax arbitrage. Yet this critical view does not translate into its policy advice at country level. In regular surveillance of developing countries, the IMF remains committed to a benign view of transnational banking, even when confronted with growing cross‐border fragilities. During crises of cross‐border banking, the IMF tailors its conditionality to minimize domestic regulatory challenges to cross‐border banking models and to propose crisis measures that create new profit opportunities for transnational banks.

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The Elephant in the Room: The Need to Deal with What Banks Do*

Cited by 11 publications

References 0 publications

The Financial Crisis

The Financial Crisis

The Business Models of Large Interconnected Banks and the Lessons of the Financial Crisis

The IMF's Rethink of Global Banks: Critical in Theory, Orthodox in Practice

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