The Future of Large, Internationally Active Banks

Description

The Great Financial Crisis of 2007–2010 has had a major impact on large cross-border banks, which are widely blamed for the start and severity of the crisis. As a result, much public policy, both in the United States and elsewhere, has been directed at making these banks safer and less influential by reducing their size and permissible powers through increased government regulation. At the Federal Reserve Bank of Chicago's 18th annual International Banking Conference, held in November 2015, the status of these large cross-border banks was critically evaluated. In collaboration with the World Bank, the conference held discussions on the current regulatory landscape for large and internationally active financial institutions; the impact of regulation on bank permissible activities and international trade; improvements in risk management; necessary repairs to the bank safety net; the resolution of insolvent banks operating across national borders; corporate governance for banks in the new environment; implications for market and government discipline; and, progress in achieving international cooperation. Contributors include international policymakers, practitioners, researchers, and academics from more than 30 countries. The papers from the conference are collected in this volume. Preface Acknowledgments About the Editors Contents Part I: Special Addresses 1 Shared Responsibility for the Regulation of International Banks • Daniel K. Tarullo 2 Post-Crisis Risks and Bank Equity Capital • Thomas M. Hoenig 3 Reputational Risks and Large International Banks • Ingo Walter Part II: The Cross-Border Banking Landscape 4 Cross-Border Banking Flows and Organizational Complexity in Financial Conglomerates • Linda S. Goldberg 5 Global Banks: Good or Good-Bye? • Thomas F. Huertas 6 The Future of Large, Internationally Active Banks: Does Scale Define the Winners? • Joseph P. Hughes and Loretta J. Mester 7 The International Banking Landscape: Developments, Drivers, and Potential Implications • Juan A. Marchetti Part III: Banking Activity Trends Following the Financial Crisis: Expansion? Retrenchment? 8 How Did Foreign Bank Lending Change During the Recent Financial Crisis: An Overview • Allen N. Berger, Tanakorn Makaew, and Rima Turk-Ariss 9 Banking Activity Trends Following the Financial Crisis: Expansion or Retrenchment? • Stijn Claessens and Neeltje van Horen 10 Global Banking: Old and New Lessons from Emerging Europe • Ralph De Haas 11 Banks’ Love Story with Sovereign Debt: Causes, Consequences, and Policy • Alexander Popov Part IV: Implications for Supervision and Regulation 12 Patterns in International Banking and Their Implications for Prudential Policies • Ingo Fender and Patrick McGuire 13 Supervision and Regulation: Effects of Global Financial Crisis on Japan and Asia • Takatoshi Ito 14 The Future of Large, Internationally Active Banks: Implications for Supervision and Regulation • Anil K. Kashyap Part V: Risk Management 15 At a Crossroad? Regulatory Capital and Operational Risk • Dietmar Serbee and Michael Alix 16 The Transmission of Bank Default Risk During the Global Financial Crisis • Deniz Anginer, Eugenio Cerutti, and Maria Soledad Martinez Peria 17 An Overview of Regulatory Stress-Testing and How to Improve It • Matt Pritsker 18 The Role of Foreign Banks in Local Credit Booms • Stijn Claessens and Neeltje van Horen Part VI: Safety Net and Resolution Issues for Large and Cross-Border Banks 19 Towards a Global Solution for a Global Problem • Eva H. G. Hüpkes 20 Cross-Border Bank Resolution: Recent Developments • Ceyla Pazarbasioglu, Ross Leckow, Barend Jansen, Marina Moretti, Wouter Bossu, Alvaro Piris, Elsie Addo Awadzi, Marc Dobler, Alessandro Gullo, Oana Nedelescu, Sven Stevenson, and Oliver Wünsch Part VII: Corporate Governance Issues in the New Environment 21 Corporate Governance and Bank Risk Taking • Deniz Anginer, Asli Demirgüç-Kunt, Harry Huizinga, and Kebin Ma 22 Vertical and Horizontal Problems in Financial Regulation and Corporate Governance • Jonathan R. Macey and Maureen O’Hara 23 Incentive Compensation and Bank Risk: Insights from Organizational Economics • Edward Simpson Prescott 24 Cultural Failures at Banks: A Review and Possible Solutions • Alan Morrison and Joel Shapiro Part VIII: Policy Discussion: Where to from Here? 25 Understanding the Future of Banking Scale and Scope Economies, and Fintech • Arnoud W. A. Boot 26 Four Key Factors Affecting the Future of Large, Internationally Active Banks • John C. Dugan 27 The Last Crisis, the Next Crisis, and the Future of Large Banks • Phillip Swagel 28 The Future of Large, Internationally Active Banks • Mahmoud Mohieldin