Studies

Competition, Regulation and Risk-Taking in Banking

Professor

 

Rafael Repullo (CEMFI)

Dates

 

4 – 8 September 2017

Hours

 

15:30 to 19:00

Intended for

 

Academic economists and central bankers.

Prerequisites

 

Participants should be comfortable following Master level courses in microeconomics.

Overview

 

The course provides an overview of recent research on the relationship between competition, prudential regulation, and the stability of the banking system. The course starts with a review of models of perfect and imperfect competition in banking and of the problems of adverse selection and moral hazard in credit markets. The second lecture discusses the role of banks in providing insurance against liquidity risk, which offers an explanation for the existence of bank runs and a rationale for deposit insurance. The third lecture examines the possible existence of a trade-off between competition and financial stability. The fourth lecture presents an overview of bank regulation from Basel I to Basel III, and discusses some key features of the new regulation such as its loan pricing effects, the rationale for the cyclical adjustment of risk-sensitive capital requirements, and the optimal regulation of liquidity risk. The course concludes with a review of recent topics on banking research such the effect of shadow banks on the effectiveness of bank capital regulation and the economics of bank supervision, with a special reference to the design of the Single Supervisory Mechanism of the European Central Bank.

Topics

 

Perfect and imperfect competition in banking.
Adverse selection and moral hazard in credit markets.
Banks as liquidity suppliers: Bank runs.
Market power and bank risk-taking.
Basel III: Capital and liquidity requirements.
Markets, banks, and shadow banks.
Bank supervision.

     
 

Rafael Repullo is Professor of Economics and Director of CEMFI. He is Fellow of the Econometric Society and of the European Economic Association, Research Fellow of the Centre for Economic Policy Research (CEPR), member of the Financial Economists Roundtable, and Co-Editor of the International Journal of Central Banking. He holds a PhD in Economics from the London School of Economics (LSE), and has worked in the Department of Economics of the LSE and the Research Department of the Bank of Spain. He has been a Houblon-Norman Fellow at the Bank of England, and has held visiting appointments at the European Central Bank, the Federal Reserve Board, the Federal Reserve Banks of Minneapolis and New York, the London School of Economics, and the Universities of Columbia, Pennsylvania, Princeton, and Tel Aviv. He has been President of the Spanish Economics Association, Executive Vice-President of the Econometric Society and member of the Executive Committee of the European Economic Association, and is currently member of the Executive Committee of the Econometric Society. His recent research is in the areas of banking and corporate finance.

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