The Regulatory Response to the Financial Crisis

By C. Goodhart. Social Science Research Network, 2008

331 citations recorded by the source corpus.

There are numerous aspects concerning financial regulation which the current financial turmoil has high-lighted. These include: (1) the form of deposit insurance; (2) bank solvency regimes, 'prompt corrective action'; (3) Central Banks' money market operations; (4) commercial bank liquidity risk management; (5) procyclicality of CARs (and mark-to-market); lack of counter-cyclical instruments; (5) boundaries of regulation, conduits, SIVs and reputational risk; (6) crisis management: (a) within countries, e.g. UK Tripartite Committee; or (b) cross-border, how to allocate the burden of cross-border defaults? This paper describes how the crisis exposed regulatory failings, drawing largely on UK experience, and suggests remedies.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/b9efe34abbe4f83d94ec654b67aa968e9319cfe7

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Citations in the corpus

The fundamental principles of financial regulation (2009, background): “The work by Segoviano, of the IMF, and Goodhart (2009) examining the effect on the Probability of Default of other banks in the system, conditioned on the failure of any specific bank, is another exercise in this same genre.”
Funding Liquidity Risk in a Quantitative Model of Systemic Stability (2009, positive): “Policy design: RAMSI can be used for counterfactual experiments in which regulatory changes could affect systemic risk (see for example Goodhart, 2008).25 For example, we could analyse regulations that require banks to hold more capital or liquid assets, or make their holdings vary across the cycle.”
Credit Rating Agencies (2011, neutral): “…timely, clear, concise, specific, and prominent manner and record all significant threats to the rating agency’s independence or that of its employees involved in the credit rating process, together with the 93 Goodhart (2009), p. 17.”
Are All the Sacred Cows Dead? Implications of the Financial Crisis for Macro- and Financial Policies (2010, background): “23 Goodhart (2008b). 24 Greenspan (2004). 25 This view is also stated by Mishkin (2008).”
Rating the raters: Are reputation concerns powerful enough to discipline rating agencies?☆☆☆ (2009, background): “Lizzeri (1999) models non-contingent fee and rating concerning the (possibly negative) value of an object. He shows that at equilibrium a monopoly CRA will only reveal whether the object has positive or negative value (if all objects have positive values then the CRA discloses no information). Doing”
The 2007 Meltdown in Structured Securitization: Searching for Lessons not Scapegoats (2008, background): “One way is for CROs to bond the quality of their work by subjecting it to effective independent review (Goodhart 2008a) and setting aside some of their fees in a fund from which third-party special masters or expedited civil judgments could indemnify investors for provable harm in instances where…”