Financial crisis
RBA paper builds new model of banks’ credit losses
Model draws on new dataset and focuses on interactions between portfolio-level and macro variables in attempt to explain historical bank credit losses in Australia
BIS research posits test for unsustainable credit growth
Authors link long-run credit growth with leverage and debt service ratio, proposing a model they claim would have helped predict the 2008 financial crisis three years before it struck
Glenn Stevens flags capital market risks
RBA governor says the growing role of asset managers and lower market liquidity are cause for concern; combined with cross-border capital flows, this could trigger an abrupt sell-off
Varoufakis defends reshaped Greek reform agenda
Greek finance minister says extension bought time for a ‘serious conversation’ with creditors and outlines ways in which he wants reforms to differ from troika prescriptions
Fed research: Three channels of shadow banking fragility
Working paper models the increased fragility created by shadow banks, even though they provide higher levels of credit to the economy
Balkanisation of bank lending has made recipient countries safer, says IMF
Analytical chapter from upcoming financial stability report highlights benefits of reduction in certain cross-border credit flows
Bundesbank's Dombret: shadow banking oversight is 'miles away'
Regulators may never be able to fully monitor the risks created by shadow banking, says Bundesbank board member
Expectations have variable impact, finds ECB paper
Working paper suggests there have been ‘significant changes’ in the degree to which expectations have driven unemployment, with a particularly large effect during 2008 financial crisis
Romer and Romer find financial crisis impact ‘not large’
NBER working paper constructs new series on financial distress in advanced economies to better capture degrees of financial crisis; finds output declines are ‘moderate and largely temporary’
BIS committee urges central banks to consider collateral policies ahead of time
Central banks should be aware of the effects of their policies on collateral markets, and use this knowledge to prepare in advance for crises, CGFS report finds
Haldane studies finance through lens of ‘complexity theory’
BoE chief economist sets out thesis in favour of viewing finance as a layered ‘system of systems’, with implications for the way risks are identified and managed
Risks in commercial property have fallen, RBNZ research finds
Article in latest RBNZ bulletin finds less leverage is being used to fund new purchases and developments, while market is showing signs of a ‘robust’ recovery
ECB paper emphasises importance of time horizons for early-warning models
Working paper finds the selection of a particular time horizon can have ‘considerable implications’ for the performance of economic variables in predicting bank crises
RBA research finds CCP rules are effective in containing severe shocks
Paper tests central counterparties under extreme ‘tail of tail’ scenarios and finds new rules designed to promote their stability are effective
BIS charts ‘boundaries of the unthinkable’ as risks rise
Quarterly review flags growing vulnerabilities and signs of credit booms in some economies; research finds limited impact of deflation on growth, pointing to importance of financial sector
Iceland expects ‘significant’ progress in lifting capital controls this year
Healthy economy and sturdy banking system pave way for lifting of capital controls, but risks are 'tilted to the downside', IMF report says; central bank at a ‘difficult juncture’
BIS paper says liquidity regulation should not replace lender of last resort function
Lender of last resort and liquidity regulations perform separate roles, and therefore one cannot replace the other, working paper says
Hryvnia back from brink despite central bank U-turn
Central bank manages to stem Ukrainian currency’s free-fall despite adding to market chaos with volte-face on foreign exchange controls; two failed banks enter liquidation
Greek debt deal marks start of rough road
Negotiations on Friday ended in a compromise stacked in Germany’s favour; although disaster has been temporarily averted there are more battles to come, and Greece’s funding remains tight
BoE research finds high-frequency trading makes prices more efficient
High-frequency trading, although correlated, appears to be based on information and therefore helps markets form prices efficiently, working paper finds
More reforms needed to tackle CCP risks, warns IMF paper
Significant risks remain despite efforts to improve the resilience of central counterparties, IMF working paper warns; direct access to central bank facilities would help
NBER paper finds shareholder protection dampens crises
Stock markets provide emergency source of funding during banking crises, and the shock-absorbing effect is stronger if shareholders are better protected, working paper finds
Bank of Canada research underscores need for securitisation reform
Working paper warns asymmetric information impairs market functioning and means risk-sharing is not enough to efficiently allocate securitisations
Greek crisis meeting gets go-ahead despite German challenge
A meeting of the Eurogroup will take place Friday after Greece yesterday sought a six-month bailout extension, but Germany has moved quickly to challenge the proposed compromise