An economist focusing on global banks and financial markets.
Currently writing on bank regulation and structure, shadow banking, and global liquidity.
Also covering economic policy in Ireland, Spain, and Ukraine.
- Liquidity and Transparency in Bank Risk Management J Fin Intermediation 2013
Liquidity buffers (e.g. Basel LCR) can only protect banks against small liquidity shocks. Banks' transparency is essential to maintain market access during prolonged systemic stress.
- Capital Regulation and Tail Risk (with Enrico Perotti and Razvan Vlahu) Int J Central Banking 2011 On VOX
Banks with higher capital are less likely to breach the minimal capital ratio, and consequently may take more risk.
- The Dark Side of Bank Wholesale Funding (with Rocco Huang) J Fin Intermediation 2011
The providers of wholesale funding may choose to remain uninformed of bank fundamentals, and trigger inefficient liquidations based on imprecise public information.
- The first paper (2008) to identify short-term wholesale funding as a major pre-crisis vulnerability
- The top citation on "wholesale funding" on Google Scholar.
- Bank Liquidity Regulation and the Lender of Last Resort J Fin Intermediation 2009
Bank may hold insufficient liquidity and gamble for LOLR support, especially when other banks in the system are also doing so.
- Banking and Trading (with Arnoud Boot)
Banks may trade too much and in too risky a fashion. These distortions became more acute in the last decade due to deeper financial markets.
- Bailouts and Systemic Insurance (with Giovanni Dell'Ariccia)
A government's commitment to shield banks from contagion may increase their incentives to invest prudently, despite potential moral hazard effects.
- Global Liquidity and Drivers of Cross-Border Bank Flows (with Eugenio Cerutti and Stijn Claessens) on VOX
Global liquidity driven by US monetary policy, European bank conditions. Countries can manage exposure thought better macro framework, bank regulation, and capital controls.
- Bank Size, Capital, and Systemic Risk (with Luc Laeven and Hui Tong)
Large banks performed worse in the 2008 crisis, because they had lower capital and less stable funding. Market-based activities and organizational complexity of banks affected their systemic risk contributions (SRISK), but not idiosyncratic risk.
- Franchise Value and Risk-Taking in Modern Banks (with Natalia Martynova and Razvan Vlahu)
High franchise value may increase bank risk-taking, when it enables banks to borrow more for larger gambles. This result explains risk-taking in financial firms with valuable franchises, such as UBS or AIG.
- Banks and Shadow Banks (with Javier Suarez)
- Capital Regulation and Competition in Banking (with Arnoud Boot and Matej Marinc)
- Why are Banks So Complex? (with Charles Calomiris)
- Corporate Governance of Banks and Financial Stability (with Luc Laeven)
Bank corporate governance reforms may be useful, but cannot substitute for strong supervision.
- Bank Size and Systemic Risk (with Luc Laeven and Hui Tong) IMF Staff Discussion Note 14/01 On iMFdirect On VOX As cited by Stan Fischer
Large banks have lower capital, less stable funding, more market-based activities, more organizational complexity.
Banks' market-based activities increase systemic but not standalone bank risk; this offers a clear rationale for macroprudential policy.
- What Is Shadow Banking? IMF WP 14-25
Proposes to define shadow banking as "all financial activities, except traditional banking, which require a public or private backstop to operate."
- How Much Capital Should Banks Have?
Banks may need 18% risk-weighted capital, 9% leverage to fully absorb asset shocks of the size seen in past crises in OECD countries.
- Competition Policy for Modern Banks IMF WP 13/126 On VOX Covered by Bloomberg
Competition policy can support financial stability by dealing with too-big-to fail and other structural (scope of activities-related) issues in banking, and facilitating crisis management.
- Shadow Banking: Economics and Policy (with Stijn Claessens, Zoltan Poszar, and Manmohan Singh) IMF Staff Discussion Note 12/12 On VOX
Two key shadow banking functions are securitization and collateral intermediation. They may be economically valuable, but without appropriate regulation pose systemic risks.
- New Risks in Financial Intermediation, in IMF Global Financial Stability Report, Oct 2012
Significant changes in the structure of the financial sector over the last decade have led to new systemic risks.
- Externalities and Macroprudential Policy (with Gianni De Nicolo and Giovanni Favara) IMF Staff Discussion Note 12/05 On VOX
The economic rationale of macroprudential policy is to correct market failures - risk externalities across financial institutions and from finance to the real economy.
- Why Are Canadian Banks More Resilient? (with Rocco Huang, 2009), IMF WP 09/152 On VOX The dataset
Depository funding was a major factor for the stability of large OECD banks during the crisis. Canadian banks had significantly more deposits than OECD average.
- European Crisis / Program Work
- Covering economic policy in Ukraine (2014-)
- Covering economic policy in Ireland and Spain (2011-)
- A Banking Union for the Euro Area IMF Staff Discussion Note 13/01
- Financial Sector
- Global Liquidity: Issues for Surveillance, IMF Board Paper, April 2014
- Bank Funding and Financial Stability, Chapter 3 of IMF Global Financial Stability Report, October 2013
- Key Aspects of Macroprudential Policy, IMF Policy Paper, September 2013 See also a Background Paper
- Progress toward a Safer Financial System, Chapter 3 of IMF Global Financial Stability Report, October 2012
- A Fair and Substantial Contribution, an IMF Report to G20 on Financial Sector Taxation, 2010
- Government-Sponsored Financial Institutions in Advanced Economies (with Aditya Narain, 2006) IMF WP 07/227
- U.S. and Canada
- Missions: U.S. Article IV 2009 (monetary policy), Canada Article IV 2009 (monetary policy, financial sector)
- Inflation Expectations and Commodity Prices, U.S. Article IV 2011 (with Oya Celasun and Roxana Mihet) IMF WP 12/89 A short version
- At the Bank of England:
Лев Ратновский Lev Ratnovskiy,