Economic Analysis of Financial Regulation

Presentation on theme: "Economic Analysis of Financial Regulation"— Presentation transcript:

1 Economic Analysis of Financial Regulation
Chapter 12 Economic Analysis of Financial Regulation

2 Bank Panic and need for Deposit Insurance
金融市場free-rider 問題→bank private loans 存款人因free rider問題而不願監督銀行 Bank panics 來自於經濟蕭條，會導致某些銀行淨值為負，因為排序支付問題(sequential service constraint)，進而發生擠兌與傳染效果 19世紀末至20世紀初， 差不多每20年一次金融風暴。 。

3 Asymmetric Information and Bank Regulation: Government Safety Net
Bank panics and the need for deposit insurance: FDIC(聯邦存款保險公司): short circuits(短期融通) bank failures and contagion(傳染) effect. Payoff method.(支付法) Purchase and assumption method (承購法) (typically more costly for the FDIC). FDIC創建之前平均每年有2000家銀行倒閉，之後倒閉家數減少15%。 Other form of government safety net: Lending(貸款) from the central bank to troubled institutions (like 2008 subprime crisis)(lender of last resort(最後貸款者).

4 Government Safety Net Moral Hazard(道德危險) Adverse Selection(相反選擇)
increased incentive to taking risks Depositors do not impose discipline of marketplace (by withdrawing funds).-該提款時反而存款 Financial institutions have an incentive to take on greater risk. Bet: “Heads I win, Tails the taxpayer loses” Adverse Selection(相反選擇) Risk-lovers find banking attractive. Depositors have little reason to monitor financial institutions.

5 Government Safety Net:Too Big to Fail
Government provides guarantees(政府提供保證) of repayment to large uninsured creditors of the largest financial institutions even when they are not entitled(不具資格) to this guarantee Uses the purchase and assumption method(承購法) Increases moral hazard incentives for big banks(大銀行的道德危險誘因更大) 大陸伊利諾斯銀行倒閉，存款人+債權持有者均受到保護。另外11家大型銀行也受到同樣待遇。

6 Government Safety Net: Financial Consolidation
Larger and more complex financial organizations challenge regulation Increased “too big to fail(越大越不能倒)” problem Extends safety net to new activities(安全網延伸至新的活動領域)(underwriting, insurance, or real estate), increasing incentives for risk taking(承受風險) in these areas (as has occurred during the subprime financial crisis in ). 金融創新與相關法案的鼓勵，導致金融機構加速併購，各類大型且複雜的金融機構紛紛出籠。

7 Restrictions on Asset Holdings
Attempts to restrict financial institutions from too much risk taking Bank regulations Promote diversification(分散) Prohibit holdings of common stock(禁止持有股票) So onerous and impaired (繁複並有損效率) Capital requirements Minimum leverage ratio (for banks)(最低槓桿比率) Basel Accord: risk-based capital requirements (Basel I And Basel II) Regulatory arbitrage(法規套利) Prompt corrective action(迅速糾正措施)(pg ) Well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, critically undercapitalized

8 Financial Supervision: Chartering and Examination
Chartering(執照特許) (screening of proposals to open new financial institutions) to prevent adverse selection Examinations(金融檢查) (scheduled and unscheduled) to monitor capital requirements and restrictions on asset holding to prevent moral hazard Capital adequacy Asset quality Management Earnings Liquidity Sensitivity to market risk Filing periodic ‘call reports’

9 Assessment of Risk Management
Greater emphasis on evaluating soundness of management processes for controlling risk(控管風險的管理程序是否完好) Trading Activities Manual of 1994 for risk management rating based on Quality of oversight provided Adequacy of policies(政策) and limits(授權額度) for all risky activities Quality of the risk measurement and monitoring systems Adequacy of internal controls(內部控管與稽核) Interest-rate risk limits Internal policies and procedures Internal management and monitoring Implementation of stress testing and Value-at risk (VAR)

10 Disclosure(揭露) Requirements
Requirements to adhere to standard accounting principles and to disclose wide range of information The Basel 2 accord and the SEC(證管會) put a particular emphasis on disclosure requirements The Sarbanes-Oxley Act of 2002 established the Public Company Accounting Oversight Board(建立PCAOB，管制利益衝突) Mark-to-market(依市值計價) (fair-value公平市價) accounting

11 Consumer Protection Consumer Protection Act of 1969 (Truth-in-lending Act). Fair Credit Billing Act of 1974.(公平的信用費率法案) Equal Credit Opportunity Act of 1974, extended in 1976.(反歧視) Community Reinvestment Act.(放款所有區域) The subprime mortgage crisis illustrated the need for greater consumer protection.

12 Restrictions on Competition
Justified as increased competition can also increase moral hazard incentives to take on more risk. Branching restrictions (eliminated in 1994) Glass-Steagall Act (repealed(被廢止) in 1999) Disadvantages Higher consumer charges Decreased efficiency

13 Macroprudential Vs. Microprudential Supervision
Before the global financial crisis, the regulatory authorities engaged in microprudential supervision(個體監理), which is focused on the safety and soundness of individual financial institutions. The global financial crisis has made it clear that there is a need for macroprudential supervision(總體監理), which focuses on the safety and soundness of the financial system in the aggregate.

14 Table 1 Major Financial Legislation in the United States

15 Table 1 Major Financial Legislation in the United States (cont’d)

16 Figure 1 Bank Failures in the United States, 1934–2010
Source:

17 The 1980s S&L and Banking Crisis
Financial innovation(金融創新) and new financial instruments increased risk taking Increased deposit insurance led to increased moral hazard Deregulation(自由化) Depository Institutions Deregulation and Monetary Control Act of 1980 Depository Institutions Act of 1982

18 Financial Institutions Reform, Regulatory and Enforcement Act of 1989
The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 Financial Institutions Reform, Regulatory and Enforcement Act of 1989 Federal Deposit Insurance Corporation and Improvement Act of 1991 Cost of the bailout(紓困) approximately $150 billion, or 3% of GDP.

19 Banking Crises Throughout the World
“Déjà vu(似曾相似) all over again” Deposit insurance is not to blame for some of these banking crises The common feature of these crises is the existence of a government safety net, where the government stands ready to bail out troubled financial institutions.

20 Table 2 The Cost of Rescuing Banks in a Number of Countries

21 FIGURE 2 Banking Crises Throughout the World Since 1970
Source: Gerard Caprio and Daniela Klingebiel, “Episodes of Systemic and Borderline Financial Crises” mimeo., World Bank, October 1999.

22 The Dodd-Frank Bill and Future Regulation
The system of financial regulation(有系統的金融規範) is undergoing dramatic changes after the global financial crisis Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010: The most comprehensive financial reform legislation since the Great Depression(自從大蕭條以後最縝密的金融改革)

23 The Dodd-Frank Bill and Future Regulation (cont’d)
The Dodd-Frank Bill addresses 5 different categories of regulation: Consumer Protection (消費者保護) Resolution Authority (解決問題的授權) Systemic Risk Regulation (系統風險規範) Volcker Rule (伏爾克法則) Derivatives (衍生性商品)

24 陶德-富蘭克法案（Dodd-Frank Act)
新設「消費者金融保護局｣ 成立「金融穩定監督委員會」 針對系統性重要金融機構的退場措施 防止金融機構高層之過份薪酬 限制銀行等相關金融機構自營交易及高風險衍生性交易 提高國際監管標準及加強國際合作 美聯儲(Fed)將獲得更大權力。 美證券交易委員會（SEC）將獲得更大權力。 “大到不能倒”的金融機構制定的條款將有可能對投資基金以及這些基金的部分投資顧問造成影響。 沃克爾規則可能會導致私募基金的潛在投資人群規模縮減。 有關激勵性薪酬的限制和可能的禁令將會使基金管理人習以為常的豐厚收入大打折扣。 如果委員會認為某些投資顧問對美國的經濟體系構成特殊的風險，則這些投資顧問可能會成為受監管的非銀行金融機構並在業務經營方面受到更為嚴格的限制。最後，對沖基金或私募股權基金的投資顧問還可能被FDIC執行清算。 金改法案主要尋求在以下四個領域達成國際共識 監管資本標準； 國際金融市場監管； 對跨國經營金融機構的監管； 危機防範和管理 G20於其2009年4月會中即通過： 金融監理改革及加強國際金融組織治理聯手打擊逃稅天堂 加強對沖基金管理，要求對沖基金或其管理人註冊，並披露足以評估這些基金單獨或整體構成的系統性風險的適當信息。

25 新設「消費者金融保護局」 (Consumer Financial Protection Bureau，CFPA)
經費由美國聯邦儲備局(Fed)提供， 隸屬美國財政部管轄。由總統任命的獨立主管來領導。 CFPA 將對抵押貸款、信用卡、儲蓄和支票帳戶等提供消費信貸產品的金融機構實施嚴格的監管。 能夠對資產規模在100億美元以上的任何金融機構擁有直接審查和執法權。司法管轄權包括銀行，信用機構，證券公司，抵押貸款服務及其他金融公司。 明確規定，美國將新設全國性金融消費者投訴熱線，為消費者提供投訴金融產品和服務問題的免費服務 管理提供信用卡或抵押貸款等消費者金融產品及服務的金融機構，監管涵蓋所有抵押貸款相關業務、資產超過100億美元的銀行和信貸機構、發薪日貸款方、支票兌換機構以及其他某些非銀行金融機構。 

26 ROC的消費者金融保護 金融消費者保護法(100.12.30) 根據金保法發布6項子法 財團法人金融消費評議中心(101.1.2)
專業投資機構範圍及一定財力或專業能力條件 金融服務業從事廣告業務招攬及營業促銷活動辦法 金融服務業確保金融商品或服務適合金融消費者辦法 金融服務業提供金融商品或服務前說明契約重要內容及揭露風險辦法 金融消費爭議處理機構設立及管理辦法 金融消費爭議處理機構評議委員資格條件聘任及評議程序辦法 財團法人金融消費評議中心( ) 截至 止，中心總共受理1251案件，包括申訴及評議案件。

27 美國針對系統性重要金融機構的退場措施 授權聯準會及FDIC規定，被指定為系統性重要之金融機構，需提交退場計畫。
授權FDIC建立「有秩序清理計畫」(Orderly Liquidation Authority, OLA)，FDIC可透過OLA對陷入財務困境的系統性重要金融機構進行接管及有秩序的清算。 不同於FDIC的存款保險基金，此計畫最初並不需要業界提供資金。允許FDIC可向財政部以借貸方式支應接管後相關營運所需費用，並可向系統性重要金融機構收取風險差別費率，以支付接管後所產生之債務。 明訂禁止使用納稅人的錢紓困或援助個別金融機構。 僅美國銀行、花旗集團(Citigroup Inc.)、摩根大通(J.P. Morgan Chase & Co.)和富國銀行(Wells Fargo & Co.)四家機構就控制了超過7萬億美元的資產，在美國資產總量中的佔比接近60%。一旦美國銀行出現嚴重問題，監管機構的超級委員會「金融穩定和監督委員會」(Financial Stability and Oversight Council)又該如何應對如此龐大機構的失敗呢?自2009年初以來美國銀行已經虧損了140億美元。對一個資產規模高達2.26萬億美元、員工總數多達28.8萬人的全國性銀行而言，我們能對其實行「有序清算」嗎? 大型金融公司將出資成立一個500億美元的基金，負擔這些成本。

28 美國針對系統性重要金融機構的退場措施 授權聯準會及FDIC規定，被指定為系統性重要之金融機構，需提交退場計畫。
授權FDIC建立「有秩序清理計畫」(Orderly Liquidation Authority, OLA)，FDIC可透過OLA對陷入財務困境的系統性重要金融機構進行接管及有秩序的清算。 不同於FDIC的存款保險基金，此計畫最初並不需要業界提供資金。允許FDIC可向財政部以借貸方式支應接管後相關營運所需費用，並可向系統性重要金融機構收取風險差別費率，以支付接管後所產生之債務。 明訂禁止使用納稅人的錢紓困或援助個別金融機構。 僅美國銀行、花旗集團(Citigroup Inc.)、摩根大通(J.P. Morgan Chase & Co.)和富國銀行(Wells Fargo & Co.)四家機構就控制了超過7萬億美元的資產，在美國資產總量中的佔比接近60%。一旦美國銀行出現嚴重問題，監管機構的超級委員會「金融穩定和監督委員會」(Financial Stability and Oversight Council)又該如何應對如此龐大機構的失敗呢?自2009年初以來美國銀行已經虧損了140億美元。對一個資產規模高達2.26萬億美元、員工總數多達28.8萬人的全國性銀行而言，我們能對其實行「有序清算」嗎? 大型金融公司將出資成立一個500億美元的基金，負擔這些成本。

29 The Dodd-Frank Bill and Future Regulation (cont’d)
There are several areas where regulation may be heading in the future: Capital Requirements (資本要求) Compensation (津貼) Government-Sponsored Enterprises (GSEs)  Credit Rating Agencies (信用評等機構) The Danger of Overregulation (過度規範的危險)