A paper presented at the June 2000 conference quot;Specialization, Diversification, and the Structure of the Financial System: The Impact of Technological Change and Regulatory Reform,quot; sponsored by the Federal Reserve Bank of New York

This paper derives the optimal size of the financial sector using a general equilibrium framework that is an extension of Holmstrom and Tirole's 1997 paper. We show that the financial sector has a unique optimal size relative to the size of the economy as a whole. Creating and maintaining this...

This paper surveys the theory of banking regulation from the general perspective of regulatory theory. Starting by considering the different justifications of financial intermediation, we proceed to identify the market failures that make banking regulation necessary. We then turn to examine how...

The past decade has seen dramatic losses in the banking industry. Firms that had been performing well suddenly announce large losses due to credit exposures that turn sour, interest rate positions taken, or derivative exposures that may or may not have been assumed to hedge balance sheet risk....

This paper analyzes the difficulties associated with bank regulation and deposit insurance in a unified Europe. Specifically, the consequences of the Second Coordinating Banking Directive and the quot;common passportquot; branching regulation are explored. Issues of deposit insurance premiums...

This paper examines the effect of asymmetric information on the trading of underwriting risk between insurers and reinsurers and how it is mitigated in a context of long-term relationships. It begins by explaining how information problems affect the efficiency of the allocation of risk between...

Traditional theories of intermediation are based on transaction costs and asymmetric information. They are designed to account for institutions which take deposits or issue insurance policies and channel funds to firms. However, in recent decades there have been significant changes. Although...

type="main" xml:lang="en" <title type="main">Abstract</title> <p>This article applies a unique accruals measure to empirically test whether accruals quality affects the cost of capital for property–liability insurers. We utilize insurer loss reserve errors to accurately measure the quality of accruals. This measure, as...</p>

We test the hypothesis that practicing enterprise risk management (ERM) reduces firms’ cost of reducing risk. Adoption of ERM represents a radical paradigm shift from the traditional method of managing risks individually to managing risks collectively allowing ERM-adopting firms to better...