Despite a global economic crisis comparable only to the Great Depression, near-term financial stability risks have been contained with the help of unprecedented monetary policy easing and massive fiscal support across the globe. […]
September 11, 2018
The tenth anniversary of the collapse of US investment bank Lehman Brothers and the global crisis that followed is a sober reminder of what has changed, and what has not, in the world of economics and finance. […]
October 3, 2017
The global financial crisis showed that periods of robust growth and seeming calm in financial markets can be […]
September 5, 2017
What a summer it’s been. To help you get a handle on all that has happened in the global economy, our editors have compiled a handy primer of our blogs published over the summer months. […]
June 8, 2017
Calculating how much capital banks should have is often a bone of contention between regulators and banks. While there has been considerable progress on reaching consensus on an international standard, one key issue remains unresolved. This […]
The appropriate level of bank capital and, more generally, a bank’s capacity to absorb losses, has been a contentious subject of discussion since the financial crisis. Larger buffers give bankers “skin in the game” helping to prevent excessive risk taking and absorb losses during crises. But, some argue, they might increase the cost of financial intermediation and slow economic growth.
The global financial crisis reminded us that banks often take risks that are excessive from society’s point of view and can damage the economy. In part, this is the result of the incentives embedded in compensation practices and of inadequate monitoring by stakeholders. Our analysis found the right policies could reduce banks risky behavior.