Suchergebnisse

The fi nancial crisis has exposed all EU Member States - to different degrees - with a double economic policy challenge: to foster sustainable economic growth and to consolidate public finances. Can the governments in the EU afford to forego the benefi ts of targeted tax measures at EU level - tapping the growth potential of the internal market by reducing tax obstacles and improving tax collection on cross-border activities within the EU? This paper provides a short review of the varying tax structures in the EU Member States, discusses the interdependencies as well as the EU dimension of their tax policies and gives an overview on current and future tax initiatives at EU level.

Abstract The article explores the lending behaviour of financial intermediaries over the business cycle in the light of theories emphasising agency costs. During a credit crunch loans from financial intermediaries are unobtainable at any price, and so credit may have a causal influence over economic activity. Tests of this do not find evidence of credit constraints following financial deregulation. However, since both loan supply and demand are driven by forward‐looking variables, business credit is a useful leading indicator of nominal investment.

Globalisation and the governance of the international financial system have arrived at the crossroads, where either a coherent level playing field for the cross-border activities of banks and multinational enterprises is settled upon, or the risk of another crisis will build up again. This book will explore the underlying problems alongside inconsistent economic and financial trends as a guide for researchers, advanced students and professionals to think about the interconnectedness of the factors involved. Readers will gain insights drawn from recent developments in economic theory and empirical research - a toolkit to help them in their future careers in economics and finance - illustrated with an analysis of the 2008 crisis and its aftermath.

Purpose
– The study examines the roles of capital rules, macro variables and bank business models in determining the safety of banks as measured by the "distance-to-default" (DTD) with the purpose of drawing implications for regulation of bank capital and business models.


Design/methodology/approach
– A panel regression study using pre- and post-crisis data for 108 US and European banks is used to explore the issue empirically. A new technique is also used to back out the amount of capital banks would have needed during the crisis to keep the "DTD" in the very safe zone.


Findings
– The simple leverage ratio has a strong relationship with "DTD", while the Basel ratio does not. The most important business model features are derivatives and wholesale funding, which have a strong negative relationship with "DTD". Trading and available-for-sale securities have a positive influence. Calculations show that it is not possible for any reasonable capital rule to compensate for the risks created by business model features encompassing large derivative-based activities. Bank separation policies are essential.


Originality/value
– The micro evidence-based analysis as an approach to bank regulation and business model requirements stands in contrast to the ad hoc way policy has been constructed before and after the crisis. The empirical evidence supports separation based on the balance sheet size of derivatives and a leverage ratio instead of the complex Basel risk-weighted capital approach. The current approaches to structural separation are criticised constructively, and some evidence-based suggestions for improving bank business models to reduce systemic risk are made.

This paper looks at the urgent and ongoing need to change the business models of global systemically important banks — particularly those that dominate the OTC derivatives markets which carry massive counterparty risk via collateralisation practices. It explores the three main lessons of the financial crisis: too big to fail, excess leverage and conflicts of interest. While regulatory reforms have been plentiful, none have adequately addressed the main source of the problems which lie in the very nature of the business models of large interconnected banks.