The OrigINs of FINancial FragilITY

Descripción del proyecto

Procesos de desregulación y corridas bancarias

Las crisis bancarias suelen provocar un declive económico y suelen desencadenarse por las retiradas masivas de depósitos tras la desregulación. Las turbulencias de 2023 en Estados Unidos provocaron la quiebra de tres bancos medianos. El equipo del proyecto INFINITY, financiado por el CEI, pretende mejorar nuestra comprensión de las corridas bancarias, los procesos de desregulación y la eficacia de las medidas de supervisión. Desarrollará un marco para explorar por qué los bancos ofrecen deuda exigible a pesar de los riesgos asociados. El proyecto permitirá comprender mejor el papel del capital en la estabilidad financiera y la transmisión de la política monetaria. Además, se estudiará cómo influyen los bancos en la regulación, en particular en el marco de la Ley de Crecimiento Económico, Alivio Regulatorio y Protección del Consumidor, y se evaluará el impacto de la vigilancia supervisora en la estabilidad financiera.

Objetivo

Banking crises are recurrent phenomena. They lead to large declines in economic activity and share two features: i) they are often
triggered by runs, i.e. sudden withdrawals by depositors; and ii) they follow episodes of deregulation and/or lax supervision.
The 2023 banking turmoil in the U.S. is no exception. After the relaxation of prudential rules in 2018, three midsized banks faced
distress as a result of runs, leading to three of the largest failures in history. Motivated by these events, the proposal seeks to enhance
our understanding of the occurrence of runs, the process leading to deregulation and the effectiveness of supervision. It is organized
in three projects, one theoretical [T] and two empirical [E].
1) Runs in modern banking [T]. The project builds a new framework to study why banks offer demandable debt, even if it creates run
risk. Based on some stylized facts, it departs from the standard assumptions of competitive deposit market, risk averse investors and
fully leveraged banks. The results will advance our knowledge on the role of capital for financial fragility, monetary policy
transmission and central bank credibility.
2) The political economy of banking deregulation [E]. The link between crises and deregulation prompts the question of whether
banks influence regulation. The project studies this issue in the context of the Economic Growth, Regulatory Relief, and Consumer
Protection Act (EGRRCPA). Its goal is to better understand banks’ influence on politicians and the channels through which this
influence is exerted.
3) Supervision with style: The impact of supervisors on bank behavior [E]. An important question is the extent to which the
implementation of banking regulation through supervisory oversight has a role per se in fostering financial stability. Exploiting a
unique and novel dataset, the project investigates whether and how supervisory intensity and individual supervisors’ characteristics
matter for the effectiveness of supervision.