Research Topics

Capital markets and financial sector regulation

Both the financial crisis of 2008 and the debt crisis in the years to follow were largely due to malfunctions and regulatory deficits in the financial sector. As a result, financial sector reform, and banking regulation in particular, lie at the heart of the reform agenda of European and international economic policy. With the establishment of the European Banking Union, policy in Europe has taken important steps to improve the framework of the financial sector. Despite these reforms, the banking sector in Europe remains prone to crises. In many countries, the banking sector is perceived to be too large. Core components of the banking unions, and notably the bail-in rules, have not yet been put into practice and are disputed by some member countries.

In this context, EconPol Europe’s research addresses the following three questions:

  • What are the effects of the change in the capital requirements in the banking regulation on banks’ lending?
  • Is the bail-in of debt capital an effective substitute for more equity?
  • What is the best way to deal with non-performing loans (NPLs)?

Publications

Emmanuel Farhi and Jean Tirole, "Shadow Banking and the Four Pillars of Traditional Financial Intermediation", EconPol Working Paper 16, 2018.

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Laurence Daures Lescourret and Sophie Moinas: "Fragmentation and Strategic Market-Making", EconPol Working Paper 15, 2018.

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Sophie Moinas, Minh Nguyen and Giorgio Valente: "Funding Constraints and Market Illiquidity in the European Treasury Bond Market", EconPol Working Paper 13, 2018.

 

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Selma Boussetta, Laurance Lescourret and Sophie Moinas: "The Role of Pre-Opening Mechanisms in Fragmented Markets", EconPol Working Paper 12, 2018.

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Thomas Davoine, Long Run Consequences of a Capital Market Union in the European Union", EconPol Policy Brief 6, April 2018.

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Thomas Davoine, "Population Aging and Cross-Country Redistribution in Integrated Capital Markets", EconPol Working Paper 9, April 2018.

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Gros, Daniel, "Banks as Buyers of Last Resort for Government Bonds?", EconPol Policy Brief 4, December 2017.

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Fuest, Clemens and Heinemann, Friedrich, "Accountability Bonds –  Reconciling Fiscal Policy Based on Market Discipline with Financial Stability", EconPol Policy Brief 3, November 2017.

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Farhi, Emmanuel and Tirole, Jean, "Deadly Embrace: Sovereign and Financial Balance Sheets Doom Loops", EconPol Working Paper 1, August 2017.

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