As a result of the recent financial crisis, there has been significant public debate on the role of the financial sector in bringing about the “Great Depression.” More generally, there has been debate about whether the current industry structure has enhanced social welfare or served a detrimental role.
This book is a collection of papers presented at the conference held at the Federal Reserve Bank of Chicago, in November 2012 that examined the social value of the financial sector as currently structured. Issues evaluated include what are the perceived benefits and costs of the current financial system? How valuable have industry innovations been for society? Should regulation be used to “move” the industry in a direction thought to be more valuable for society? Should “big” banks be broken up? What are the welfare implications of the current industry structure? In the book, leading industry scholars debate these issues with a goal of influencing public policy toward the industry.
Sample Chapter(s)
A Ferment of Regulatory Proposals (61 KB)
Contents:
- Keynote Addresses:
- A Ferment of Regulatory Proposals (Charles A E Goodhart)
- Progress and Priorities for Financial Reform (Mary John Miller)
- Description and Measurement of the Financial System:
- What Is Meaningful Banking Reform, Why Is It So Necessary … and So Unlikely? (Charles W Calomiris)
- The Great Leveraging (Alan M Taylor)
- Finance and Economic Development in a Model with Credit Rationing (Jean-Louis Arcand, Enrico Berkes, and Ugo Panizza)
- Too Much Finance, Too Much Credit? Comments on Papers by Calomiris, Arcand–Berkes–Panizza, and Taylor (Eugene N White)
- Social Benefits and Costs of the Current Financial System:
- Bank Regulatory Reforms and Racial Wage Discrimination (Ross Levine, Alexey Levkov, and Yona Rubinstein)
- Finance: Economic Lifeblood or Toxin? (Marco Pagano)
- Finance: Is Bigger Badder? (Gerard Caprio, Jr)
- Financial Industry Innovation:
- A Proposal for the Resolution of Systemically Important Assets and Liabilities: The Case of the Repo Market (Viral V Acharya and T Sabri Öncü)
- Reexamining Financial Innovation after the Global Financial Crisis (W Scott Frame and Lawrence J White)
- Financial Innovation and Shadow Banking (Luc Laeven)
- Effects of Regulation, the Safety Net and Other Government Guarantees:
- Evolving Intermediation (Nicola Cetorelli)
- The Socially Optimal Level of Capital Requirements: A View from Two Papers (Javier Suarez)
- Effects of Regulation, the Safety Net, and Other Government Guarantees (Mathias Dewatripont)
- Finance and Economic Activity: Variations across Emerging and Developed Markets:
- Legal and Alternative Institutions in Finance and Commerce (Franklin Allen and Jun “QJ” Qian)
- Finance in the Tropics: Understanding Structural Gaps and Policy Challenges (Thorsten Beck)
- Foreign Banks: Access to Finance and Financial Stability (Neeltje van Horen)
- Institutions, Finance, and Economic Activity: Views and Agenda (Elias Papaioannou)
- Break Up the Big Banks?:
- Breaking (Banks) Up Is Hard to Do: New Perspective on Too Big to Fail (James R Barth and Apanard (Penny) Prabha)
- Restructuring the Banking System to Improve Safety and Soundness (Thomas M Hoenig and Charles S Morris)
- Ending Too Big to Fail: A Proposal for Reform (Richard W Fisher and Harvey Rosenblum)
- Where to From Here? The Implications for Financial Regulatory Policy:
- Where to From Here? Implementation, Implementation, Implementation (Claudio Borio)
- Complexity in Financial Regulation (Andrew G Haldane and Vasileios Madouros)
- Financial Reform: On the Right Road, at the Right Pace? (Thomas F Huertas)
- Banking Regulation and Supervision in the Next 10 Years and Their Unintended Consequences (Danièle Nouy)
- The Social Value of the Financial Sector: Where to From Here? (Barbara A Rehm)
- Public Policy Options (Jürgen Stark)
Readership: Undergraduate/graduate students, researchers, and academics in international finance and banking; financial regulators, financiers, and bankers.
Viral V Acharya is the C V Starr Professor of Economics in the Department of Finance at New York University Stern School of Business (NYU Stern), where he is the PhD coordinator as well. He is also the program director for financial economics and a research affiliate at the Center for Economic Policy Research (CEPR); a research associate of the National Bureau of Economic Research in corporate finance and the European Corporate Governance Institute; a member of Advisory Scientific Committee of the European Systemic Risk Board and various financial regulatory and legislative advisory boards of India; and an academic advisor to four Federal Reserve Banks, as well as the Board of Governors.Acharya's primary research interest is in theoretical and empirical analysis of systemic risk of the financial sector and its regulation. Prior to joining Stern, he was at the London Business School (2001–08) and served as an academic director of its Coller Institute of Private Equity (2007–09). Acharya has published widely in several top economics and finance journals, and he is an associate editor of the Journal of Finance, among others. At Stern, Acharya has co-edited as well as co-written several books, the most recent of which is Dodd–Frank: One Year On, (NYU Stern and CEPR, released on voxeu.org, July 2011). Acharya has won numerous awards for his research. Acharya completed a Bachelor of Technology in computer science and engineering from the Indian Institute of Technology, Mumbai, and a PhD in finance from NYU Stern.
Thorsten Beck is professor of economics and chairman of the European Banking Center. Before joining Tilburg University and the CentER, he worked at the Development Research Group of the World Bank. Beck's research and policy work have focused on two main questions: What is the effect of financial sector development on economic growth and poverty alleviation, and what are the determinants of a sound and effective financial sector? His research has recently focused on access to financial services by small and medium-sized enterprises and households. He is co-author of Making Finance Work for Africa and Finance for All? Policies and Pitfalls in Expanding Access. Beck's experience in both research and policy work includes the countries of Bangladesh, Bolivia, Brazil, China, Colombia, Mexico, Peru, Russia, and several sub-Saharan African countries.
Douglas D Evanoff is vice president and senior research advisor for banking issues at the Federal Reserve Bank of Chicago. In that capacity, he conducts research on issues associated with financial institutions and markets, coordinates conferences on relevant policy issues, and supports the Federal Reserve System and the Federal Reserve Bank of Chicago's senior management in policy deliberations. His research interests include financial regulation, consumer credit issues, mortgage markets, productive efficiencies, and bank merger analysis. Prior to joining the Chicago Fed, Evanoff was an instructor in finance at Southern Illinois University and an assistant professor at St. Cloud State University. He currently is an adjunct faculty member in the School of Business at DePaul University. His research has recently been published in leading academic journals, including the American Economic Review, Journal of Financial Economics, and Journal of Money, Credit and Banking, among others. He has also edited a number of books addressing issues associated with financial institutions. Evanoff holds a PhD in economics from Southern Illinois University.
George G Kaufman is the John F Smith Professor of Economics and Finance at Loyola University Chicago and a consultant to the Federal Reserve Bank of Chicago. From 1959 to 1970, he was at the Federal Reserve Bank of Chicago, and after teaching for ten years at the University of Oregon, he returned as a consultant to the Bank in 1981. He has also been a visiting professor at Stanford University, the University of California, Berkeley, and the University of Southern California, as well as a visiting scholar at the Reserve Bank of New Zealand, the Federal Reserve Bank of San Francisco, and the Office of the Comptroller of the Currency. He has also served as the deputy to the assistant secretary for economic policy at the US Department of the Treasury. He is co-editor of the Journal of Financial Stability; a founding co-editor of the Journal of Financial Services Research; past president of the Western Finance Association, Midwest Finance Association, and the North American Economics and Finance Association; president-elect of the Western Economic Association; past director of the American Finance Association; and co-chair of the Shadow Financial Regulatory Committee. Kaufman holds a PhD in economics from the University of Iowa.
Richard Portes is professor of economics at London Business School and president of the Centre for Economic Policy Research. He was formerly the directeurd;'études at the Ecole des Hautes Etudes en Sciences Sociales in Paris (1978–2011), a Rhodes Scholar, and a fellow of Balliol College, Oxford. In 2003–04 he was Joel Stern Visiting Professor of International Finance at Columbia Business School, and in 1999–2000 he was Distinguished Global Visiting Professor at Haas Business School, University of California, Berkeley. He has also taught at Princeton, Harvard (as a Guggenheim Fellow), and Birkbeck College (University of London). He writes and speaks widely on a broad range of international macroeconomics and finance topics. Portes was the first to examine the international role of a single European currency (European Economy, 1991). He and Barry Eichengreen wrote Crisis? What Crisis? (CEPR, 1995), which proposed the collective action clauses in sovereign bond contracts that have since become standard. In February 2009 he co–authored Macroeconomic Stability and Financial Regulation (CEPR and VoxEU).Portes is an elected fellow of the British Academy and of the Econometric Society. He was decorated Commander of the British Empire in the Queen's Honours List 2003. He is co–chairman of Economic Policy, a member of the Bellagio Group on the International Economy, and a member of the Council on Foreign Relations.
