IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/hal-04140736.html
   My bibliography  Save this paper

Northern Rock: The anatomy of a crisis – the prudential lessons

Author

Listed:
  • Sonia Ondo-Ndong

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Laurence Scialom

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper attempts to analyse the main characteristics of the Northern Rock crisis and the responses of the Bank of England as lender of last resort. On the basis of the diagnosis about the causes and the handling of this banking crisis we detect the shortcomings prevailing in the UK prudential device. We therefore try to draw the prudential lessons of this experience. As we cannot claim to present an exhaustive picture of the crisis's implications from a prudential point of view, we chose to focus instead on the points with practical significance far beyond the UK's case.

Suggested Citation

  • Sonia Ondo-Ndong & Laurence Scialom, 2008. "Northern Rock: The anatomy of a crisis – the prudential lessons," Working Papers hal-04140736, HAL.
    • Handle: RePEc:hal:wpaper:hal-04140736
    Note: View the original document on HAL open archive server: https://hal.science/hal-04140736
    as

    Download full text from publisher

    File URL: https://hal.science/hal-04140736/document
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Philip Strahan, 2008. "Liquidity Production in 21st Century Banking," NBER Working Papers 13798, National Bureau of Economic Research, Inc.
    2. Goodhart, C., 2008. "Liquidity risk management," Financial Stability Review, Banque de France, issue 11, pages 39-44, February.
    3. George G. Kaufman, 2004. "Depositor Liquidity and Loss Sharing in Bank Failure Resolutions," Contemporary Economic Policy, Western Economic Association International, vol. 22(2), pages 237-249, April.
    4. Maria J. Nieto & Larry D. Wall, 2006. "Preconditions for a successful implementation of supervisors' prompt corrective action: Is there a case for a banking standard in the European Union?," FRB Atlanta Working Paper 2006-27, Federal Reserve Bank of Atlanta.
    5. Buiter, Willem, 2007. "Lessons from the 2007 Financial Crisis," CEPR Discussion Papers 6596, C.E.P.R. Discussion Papers.
    6. Tirole, J., 2008. "Liquidity shortages: theoretical underpinnings," Financial Stability Review, Banque de France, issue 11, pages 53-63, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sonia Ondo Ndong & Laurence Scialom, 2009. "Northern Rock: The Anatomy of a Crisis—The Prudential Lessons," Palgrave Macmillan Books, in: Robert R. Bliss & George G. Kaufman (ed.), Financial Institutions and Markets, chapter 3, pages 51-74, Palgrave Macmillan.
    2. Nikolaou, Kleopatra, 2009. "Liquidity (risk) concepts: definitions and interactions," Working Paper Series 1008, European Central Bank.
    3. Rötheli, Tobias F., 2010. "Causes of the financial crisis: Risk misperception, policy mistakes, and banks' bounded rationality," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(2), pages 119-126, April.
    4. Tomas Konecny & Oxana Babecka-Kucharcukova, 2016. "Credit Spreads and the Links between the Financial and Real Sectors in a Small Open Economy: The Case of the Czech Republic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 66(4), pages 302-321, August.
    5. Ahmadyan , Azam, 2017. "Measuring Liquidity Risk Management and Impact on Bank Performance in Iran," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 12(3), pages 295-315, July.
    6. Masciandaro, D. & Nieto, M. & Prast, H.M., 2007. "Financial Governance of Banking Supervision," Other publications TiSEM 65d7ff26-dca3-4da3-86ff-6, Tilburg University, School of Economics and Management.
    7. Pagès, Henri, 2013. "Bank monitoring incentives and optimal ABS," Journal of Financial Intermediation, Elsevier, vol. 22(1), pages 30-54.
    8. Gagnon, Marie-Hélène & Gimet, Céline, 2013. "The impacts of standard monetary and budgetary policies on liquidity and financial markets: International evidence from the credit freeze crisis," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4599-4614.
    9. Marc Hayford & Anastasios Malliaris, 2010. "Asset Prices and the Financial Crisis of 2007--09: An Overview of Theories and Policies," Forum for Social Economics, Taylor & Francis Journals, vol. 39(3), pages 279-286, January.
    10. Mayes, David G. & Nieto, María J. & Wall, Larry, 2008. "Multiple safety net regulators and agency problems in the EU: Is Prompt Corrective Action partly the solution?," Journal of Financial Stability, Elsevier, vol. 4(3), pages 232-257, September.
    11. Hafiz Waqas Kamran & Abdelnaser Omran & Shamsul Bahrain Mohamed-Arshad, 2019. "Risk Management, Capital Adequacy and Audit Quality for Financial Stability: Assessment from Commercial Banks of Pakistan," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(6), pages 654-664, June.
    12. Mark A. Carlson & Burcu Duygan-Bump & William R. Nelson, 2015. "Why Do We Need Both Liquidity Regulations and a Lender of Last Resort? A Perspective from Federal Reserve Lending during the 2007-09 U.S. Financial Crisis," Finance and Economics Discussion Series 2015-11, Board of Governors of the Federal Reserve System (U.S.).
    13. Dan Costin NIŢESCU & Florin Alexandru DUNĂ & Adriana Daniela CIUREL, 2020. "Banking sector and bank liquidity – key actors within financial crises?," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(623), S), pages 147-168, Summer.
    14. Farmer, J. Doyne & Kleinnijenhuis, Alissa & Nahai-Williamson, Paul & Wetzer, Thom, 2020. "Foundations of system-wide financial stress testing with heterogeneous institutions," INET Oxford Working Papers 2020-14, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    15. André Cartapanis & Jérôme Teïletche, 2008. "Les hedge funds et la crise financière internationale," Revue d'Économie Financière, Programme National Persée, vol. 7(1), pages 185-193.
    16. Landau, J.P., 2012. "Policies on sovereign debt," Financial Stability Review, Banque de France, issue 16, pages 191-201, April.
    17. Harald Benink, 2020. "Global Bank Capital and Liquidity after 30 Years of Basel Accords," JRFM, MDPI, vol. 13(4), pages 1-12, April.
    18. Michel Aglietta & Laurence Scialom, 2008. "Permanence and innovation in central banking policy for financial stability," Working Papers hal-04140738, HAL.
    19. Orlowski, Lucjan T., 2008. "Stages of the 2007/2008 Global Financial Crisis Is There a Wandering Asset-Price Bubble?," Economics Discussion Papers 2008-43, Kiel Institute for the World Economy (IfW Kiel).
    20. Rodolfo Signorino, 2011. "Economics in the Mirror of the Financial Crisis," Chapters, in: Steven Kates (ed.), The Global Financial Crisis, chapter 11, Edward Elgar Publishing.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:hal-04140736. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.