After a crisis, broad-sweeping reforms are enacted to restore trust. With the 2013 Fourth Capital Requirements Directive (CRD IV), the European Union has engaged in an ambitious overhaul of banking regulation following the Great Financial Crisis. Part of it tackles the perceived failings of banks? governance. We focus on various provisions that aim to reshape bank boards?
composition, functioning, and liabilities, and argue that they
are unlikely to improve bank boards? effectiveness and to prevent excessive risk-taking.
All in all, these rules may well negatively affect EU banks? governance. We conclude that
European policymakers and supervisors should avoid using a heavy hand, respectively when issuing rules implementing CRD IV provisions on bank boards and when enforcing them.
This essay argues that, to address the Covid-19 crisis, in addition to creating a special temporary insolvency regime, relaxing provisions for companies in the vicinity of insolvency, and enabling companies to hold virtual meetings, policymakers...Read more
The stylized fact that grounds much of the recent literature on common ownership is the parallel increase in the profitability of oligopolistic industries and common ownership. Some have argued that the growth in common ownership has caused the...Read more
We exploit the UK Bribery Act of 2010 to test whether the pricing of audit changes with the level of corruption/bribery in the firm’s business environment. Adopting a triple difference design, we show that affected firms operating in countries...Read more
The Covid crisis raises important questions about the role of stress testing during periods of systemic distress. Should stress testing of banks be abandoned? Modified? Proceed as scheduled? Different jurisdictions have taken different tacks,...Read more