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Journal Article
Financial industry deregulation in the 1980s
Newsletter
Financial regulation in the post-crisis environment
The Chicago Fed?s 46th annual Conference on Bank Structure and Competition, which took place May 5?7, 2010, focused on the future of the financial services industry in light of the recent financial crisis and forthcoming industry reforms.
Conference Paper
Geographic deregulation of banking: an analysis of the impact
Conference Paper
Innovation in financial markets
Working Paper
Measures of the riskiness of banking organizations: Subordinated debt yields, risk-based capital, and examination ratings
Recently there have been a number of recommendations to increase the role of subordinated debt (SND) in satisfying bank capital requirements as a preferred means to discipline the risk-taking behavior of systemically important banks. One such proposal recommended using SND yield spreads as the triggers for mandatory supervisory action under prompt corrective action guidelines introduced in U.S. banking legislation in the early 1990s. Currently such action is prompted by bank capital ratios. Evidence from previous research suggests that yield information may be a better predictor of bank ...
Working Paper
Sub-debt yield spreads as bank risk measures
Several recent studies have recommended greater reliance on subordinated debt as a tool to discipline bank risk taking. Some of these proposals recommend using sub-debt yield spreads as triggers for supervisory discipline under prompt corrective action (PCA). Currently such action is prompted by capital adequacy measures. This paper provides the first empirical analysis of the relative accuracy of various capital ratios and sub-debt spreads in predicting bank condition, measured as subsequent CAMEL or BOPEC ratings. The results suggest that some of the capital ratios, including the summary ...
Working Paper
Subordinated debt and bank capital reform
In recent years there has been a growing realization that there are significant problems with the current bank risk-based capital guidelines. As financial firms have become more sophisticated and complex they have effectively arbitraged the existing capital requirements. They have become so good at avoiding the intent of capital regulation that the regulations have essentially ceased to be a safety and soundness issue for supervisors and have become more a compliance issue. There is also a growing realization that bank regulation must more effectively incorporate market discipline to ...