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Regulatory Reform: A Scorecard

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Listed:
  • Cecchetti, Stephen G
  • Schoenholtz, Kermit

Abstract

The financial crisis of 2007-09 revealed many deficiencies in the financial system. In response, authorities have implemented a wide range of regulatory reforms. We survey the reforms and offer our views on where there could be further improvements. While capital requirements and levels are far higher, they are not high enough. New liquidity requirements are useful, but need simplification. Shifting derivatives transactions to central counterparties has improved resilience, but also created indispensable financial market utilities that lack credible resolution and recovery regimes. And systemic (macroprudential) regulation lacks the metrics, policy tools, governance structure, and international cooperation needed to be effective.

Suggested Citation

  • Cecchetti, Stephen G & Schoenholtz, Kermit, 2017. "Regulatory Reform: A Scorecard," CEPR Discussion Papers 12465, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:12465
    as

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    References listed on IDEAS

    as
    1. Xavier Vives, 2014. "Strategic Complementarity, Fragility, and Regulation," Review of Financial Studies, Society for Financial Studies, vol. 27(12), pages 3547-3592.
    2. Gambacorta, Leonardo & Shin, Hyun Song, 2018. "Why bank capital matters for monetary policy," Journal of Financial Intermediation, Elsevier, vol. 35(PB), pages 17-29.
    3. Gorton, Gary B., 2012. "Misunderstanding Financial Crises: Why We Don't See Them Coming," OUP Catalogue, Oxford University Press, number 9780199922901.
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    5. Douglas W. Diamond & Anil K. Kashyap, 2016. "Liquidity Requirements, Liquidity Choice and Financial Stability," NBER Working Papers 22053, National Bureau of Economic Research, Inc.
    6. repec:eee:macchp:v2-2263 is not listed on IDEAS
    7. Samuel G. Hanson & Anil K. Kashyap & Jeremy C. Stein, 2011. "A Macroprudential Approach to Financial Regulation," Journal of Economic Perspectives, American Economic Association, vol. 25(1), pages 3-28, Winter.
    8. Myers, Stewart C., 1977. "Determinants of corporate borrowing," Journal of Financial Economics, Elsevier, vol. 5(2), pages 147-175, November.
    9. Jihad Dagher & Giovanni Dell'Ariccia & Luc Laeven & Lev Ratnovski & Hui Tong, 2016. "Benefits and Costs of Bank Capital," IMF Staff Discussion Notes 16/04, International Monetary Fund.
    10. Anat Admati & Martin Hellwig, 2013. "The Bankers' New Clothes: What's Wrong with Banking and What to Do about It," Economics Books, Princeton University Press, edition 1, number 9929, December.
    11. Davies, Richard & Richardson, Peter & Katinaite, Vaiva & Manning, Mark, 2010. "Evolution of the UK banking system," Bank of England Quarterly Bulletin, Bank of England, vol. 50(4), pages 321-332.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Bank Capital and Stress Tests: The Foundation of a Thriving Economy
      by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets on 2018-07-23 11:26:07
    2. From Basel to the Volcker Rule: A FinReg Glossary
      by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets on 2018-11-19 13:24:10

    More about this item

    Keywords

    Capital requirements; Central clearing; financial regulation; liquidity requirements; macro-financial linkages; macroprudential policy; Prudential regulation; recovery and resolution planing;

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G01 - Financial Economics - - General - - - Financial Crises
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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