28-29 June 2012: Conference on Post-Crisis Banking - Amsterdam

Programme: link

Post-Crisis Banking conference

On June 28-29 a conference on Post-crisis Banking took place at De Nederlandsche Bank (DNB).

The global financial crisis has caused us to rethink many issues in banking. This conference showcased innovative research on the crisis-induced changes in financial markets and practices, regulatory responses to the crisis, and how these changes are likely to shape the future banking landscape. The conference was sponsored jointly by DNB, the European Banking Center at Tilburg University, and the University of Kansas School of Business. Conference papers will be considered for publication in a special issue of the Journal of Money, Credit and Banking, edited by Thorsten Beck (EBC), Jakob de Haan (DNB) and Robert DeYoung (JMCB).

Post-Crisis Banking conference

Theconference keynote speaker was Eric Rosengren, President of the Federal Reserve Bank of Boston. In his speech, Rosengrenfocused on financial structures that by design or reality reduce or avoid capital charges (“capital arbitrage”). Such structures can have destabilizing effects on financial markets and the broader economy. Rosengren zoomed in on two specific areas that merit consideration – money market mutual funds sponsored by banking organizations, and broker-dealer financing.

There was also a panel discussion, with contributions by Arnoud Boot, University of Amsterdam, Steve Cecchetti, Economic Adviser, Bank for International Settlements and Mark Flannery, Bank of America Eminent Scholar, University of Florida.

There were two presentations by DNB researchers. Neeltje van Horen presented her paper (Foreign banks: Trends,Impact and Financial Stability)with Stijn Claeassens (IMF).Using a new, comprehensive database on bank ownership for 137 countries over the period 1995- 2009, identifying also the home country of banks, they document substantial increases in foreign bank presence in many countries. Neeltje and Stijn show large heterogeneity in terms of home and host countries, bilateral patterns, and performance. In terms of impact, they find a negative relation between private credit and foreign bank presence, but only in countries with relatively distant foreign banks. Furthermore, leading up to the crisis, private credit grew faster when foreign bank presence was large, but not in countries with relatively distant foreign banks. In addition, foreign banks reduced credit more compared to domestic banks during the global crisis in countries where they have a small role in financial intermediation, but not so when they were dominant or funded through local deposits.

Iman van Lelyveld presented a paper (Multinational Banks and the Global Financial Crisis. Weathering the Perfect Storm?), jointly written with Ralph de Haas (EBRD). Theyuse data on the 48 largest multinational banking groups to compare the lending of their 199 foreign subsidiaries during the Great Recession with lending by a benchmark group of 202 domestic banks. Contrary to earlier, more contained crises, parent banks were not a significant source of strength to their subsidiaries during the 2008-09 crisis. As a result, multinational bank subsidiaries had to slow down credit growth about twice as fast as domestic banks. This was in particular the case for subsidiaries of banking groups that relied more on wholesale market funding. Domestic banks were better equipped to continue lending because of their greater use of deposits, a relatively stable funding source during the crisis. Iman and Ralph conclude that while multinational banks may contribute to financial stability during local crisis episodes, they also increase the risk of ‘importing’ instability from abroad.

Post-Crisis Banking conference

Conference sponsored by:
Dutch Central Bank
European Banking Center at Tilburg University
Journal of Money, Credit and Banking
University of Kansas School of Business