IMFS-CEPR Research Meeting
Global Banking and Bank Resolution
March 10, 2015
Goethe University Frankfurt
Since global banking is undergoing fundamental changes due to new regulations and new supervisory institutions the Research Meeting on March 10 aimed to bring together recent findings regarding the role of banks, the restructuring of the banking sector and the relationship of banking and state from an economic or legal perspective. The research meeting as part of the IMFS Conference was organized jointly with the Centre for Economic Policy Research (CEPR).
After the welcome by Hermann Remsperger in the name of the Foundation for Monetary and Financial Stability, the first session focused on global banking. By investigating large samples of data for 17 countries from 1870 to 2012, Moritz Schularick from the University of Bonn illustrated how mortgage lending has become the dominant share of bank lending. Friederike Niepmann from the Federal Reserve Bank of New York explained the composition of international bank flows.
Looking at the challenges for financial stability, Agnese Leonello from the European Central Bank demonstrated that government guarantees present a complicated trade-off. Anne-Laure Delatte from the French Institute for Scientific Research (CNRS) and Sciences Po shared her insights on the evolution of international banking integration coming to the conclusion that euro area banks have reduced their international exposure inside and outside the euro area while in the rest of the world banking integration has strengthened since the financial crisis.
Keynote speaker Jeffrey Gordon, Professor at Columbia Law School, evaluated bank resolution in Europe, highlighting the fact that the link between sovereigns and banks was broken by the implementation of the European Banking Union. IMFS Professor Helmut Siekmann in his talk analyzed the current situation in Greece by investigating the possibilities of exit, exclusion and parallel currencies in the euro are. Gerard Hertig, Professor of Law at ETH Zurich, concentrated on the decision-making during the financial crisis and the question why the Treasury let commercial banks fail. He suggested that once a bail-out program was already on the table it was better to err on the side of rescuing too many rather than too few banks. Finally, IMFS Visiting Scholar Vikrant Vig described the political economy of bank bailouts. According to his findings, banks that are bailed out by local politicians experience less restructuring and perform worse than banks supported by the savings bank association.
This research meeting aimed to bring together some of the recent papers that address the topics listed below from the perspective of economics or law. The conference organisers wish to nurture the interdisciplinary exchange between economic and legal research.
1. The role of global banks in international business cycles and crisis transmission.
2. The ongoing restructuring of the banking sector and institutional arrangements for bank resolution.
3. The relationship of banking and the state.
4. Legal and economic perspectives on European Banking Union.
5. The political economy of bank bailouts.
6. Views on an optimal banking system.
- Gernot Müller (University of Bonn and CEPR)
- Helmut Siekmann (IMFS, Goethe University Frankfurt)
- Vikrant Vig (London Business School and IMFS, Goethe University Frankfurt)
- Volker Wieland (IMFS, Goethe University Frankfurt and CEPR)
8:45 – 9:00
Hermann Remsperger (Stiftung Währung und Geld)
9:00 – 10:30
"The Great Mortgaging: Housing Finance, Crises, and Business Cycles"
"What determines the composition of international bank flows"
Chair: Gernot Müller (University of Bonn)
10:30 – 11:00
11:00 – 12:30
"Government guarantees and financial stability"
"Securities Trading by Banks: Micro Evidence"
Chair: Reinhard H. Schmidt (University of Frankfurt)
12:30 – 2:00
2:00 – 3:15
Keynote Address: "Bank Resolution in Europe: the Unfinished Agenda of Structural Reform"
"Exit, Exclusion and Parallel Currencies in the Euro Area"
Chair: Vikrant Vig (London Business School and IMFS)
3:15 – 3:45
3:45 – 5:15
"Decision-making during the Crisis: Why did the Treasury let commercial banks fail?"
"The political economy of bank bailouts"
Chair: Tobias Tröger (Goethe University Frankfurt)