Objective
One of the main unresolved challenges of the recent financial crisis is how society should deal with global banks that are “too big to fail.” The collapse of Lehman Brothers vividly demonstrated the costs of the failure of such an institution, with sweeping repercussions for the financial system and the broader economy. Yet, implicit public guarantees that would prevent such failures are equally costly, creating moral hazard in the form of increased risk taking and incentives for financial institutions to become larger and more complex.
The research in this proposal will address this dilemma. From a methodological perspective, my research will advance the state of the art in financial intermediation theory by explicitly modeling the failure and resolution of global banks, emphasizing crucial elements that are absent from leading theories: the design of mechanisms that allow for an orderly resolution of struggling global financial institutions, the incentives of national authorities in the regulation and resolution of global banks, the role of the corporate and organizational structure of global banks, as well as their optimal size and scope. The proposed approach is interdisciplinary; it will generate novel insights by drawing on different subfields within economics (corporate finance theory, organizational economics) and aspects of bankruptcy law. Moreover, the research will take a holistic view that explicitly recognizes the two-way feedback between the rules that govern bank resolution and decisions on funding, investment, and size taken by banks prior to a potential resolution. Overall, the findings from this research will be directly relevant for regulators and policymakers. For example, they will inform currently debated legislation regarding the regulation and resolution of global banks, such as the Single Resolution Mechanism in the EU.
Fields of science (EuroSciVoc)
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques. See: https://op.europa.eu/en/web/eu-vocabularies/euroscivoc.
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques. See: https://op.europa.eu/en/web/eu-vocabularies/euroscivoc.
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Programme(s)
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
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H2020-EU.1.1. - EXCELLENT SCIENCE - European Research Council (ERC)
MAIN PROGRAMME
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Topic(s)
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Funding Scheme
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
ERC-STG - Starting Grant
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Call for proposal
Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
(opens in new window) ERC-2016-STG
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Net EU financial contribution. The sum of money that the participant receives, deducted by the EU contribution to its linked third party. It considers the distribution of the EU financial contribution between direct beneficiaries of the project and other types of participants, like third-party participants.
WC2A 2AE London
United Kingdom
The total costs incurred by this organisation to participate in the project, including direct and indirect costs. This amount is a subset of the overall project budget.