Search Results
Journal Article
Searching for a new center: U.S. securities markets in transition
Technological challenges, governance issues, competitive pressures, and questions about the oversight of trading practices are but a few of the many forces besetting U.S. equity markets. This article outlines some important issues surrounding the evolving structure of the U.S. equity markets and offers some alternative regulatory approaches that might be more consistent with this new competitive environment. ; Crafted more than a quarter-century ago in a time of dominant markets interacting with smaller competitors, the National Market System (NMS) was based on a one-size-fits-all approach in ...
Working Paper
The Volcker Rule and Market-Making in Times of Stress
Focusing on downgrades as stress events that drive the selling of corporate bonds, we document that the illiquidity of stressed bonds has increased after the Volcker Rule. Dealers regulated by the Rule have decreased their market-making activities while non-Volcker-affected dealers have stepped in to provide some additional liquidity. Furthermore, even Volcker-affected dealers that are not constrained by Basel III and CCAR regulations change their behavior, inconsistent with the effects being driven by these other regulations. Since Volcker-affected dealers have been the main liquidity ...
Journal Article
The corporate governance of banks
The study argues that commercial banks pose unique corporate governance problems for managers and regulators as well as for claimants on the banks' cash flows, such as investors and depositors. The authors support the general principle that fiduciary duties should be owed exclusively to shareholders. However, in the special case of banks, they contend that the scope of the fiduciary duties and obligations of officers and directors should be broadened to include creditors. In particular, the authors call on bank directors to take solvency risk explicitly and systematically into account when ...
Journal Article
Bank corporate governance: a proposal for the post-crisis world
The corporate governance problems of banks are qualitatively and quantitatively different from those of other firms. The authors argue that a key factor contributing to this difference is the growing opacity and complexity of bank activities, a trend that has increased the difficulty of managing risk in financial firms. They also cite the governance challenges posed by the holding company organization of banks, in which two boards of directors?the bank?s own board and the board of the holding company that owns the bank?monitor the bank. This paradigm results in significant confusion about the ...