Banking and Financial Markets (eBook)

How Banks and Financial Technology Are Reshaping Financial Markets

Andrada Bilan, Hans Degryse, Kuchulain O’Flynn, Steven Ongena (Autoren)

eBook Download: PDF

2019 | 1st ed. 2019
XI, 221 Seiten
Springer International Publishing (Verlag)
978-3-030-26844-2 (ISBN)

Infos

The traditional role of a bank was to transfer funds from savers to investors, engaging in maturity transformation, screening for borrower risk and monitoring for borrower effort in doing so. A typical loan contract was set up along six simple dimensions: the amount, the interest rate, the expected credit risk (determining both the probability of default for the loan and the expected loss given default), the required collateral, the currency, and the lending technology. However, the modern banking industry today has a broad scope, offering a range of sophisticated financial products, a wider geography -- including exposure to countries with various currencies, regulation and monetary policy regimes -- and an increased reliance on financial innovation and technology. These new bank business models have had repercussions on the loan contract. In particular, the main components and risks of a loan contract can now be hedged on the market, by means of interest rate swaps, foreign exchange transactions, credit default swaps and securitization. Securitized loans can often be pledged as collateral, thus facilitating new lending. And the lending technology is evolving from one-to-one meetings between a loan officer and a borrower, at a bank branch, towards potentially disruptive technologies such as peer-to-peer lending, crowd funding or digital wallet services.

This book studies the interaction between traditional and modern banking and the economic benefits and costs of this new financial ecosystem, by relying on recent empirical research in banking and finance and exploring the effects of increased financial sophistication on a particular dimension of the loan contract. 

Andrada Bilan is a PhD candidate in finance at the Swiss Finance Institute and University of Zurich, Switzerland.

Hans Degryse is a professor at KU Leuven, Belgium, and a research fellow in financial economics of CEPR, UK.

Kuchulain O'Flynn is a PhD candidate in finance at the Swiss Finance Institute and the University of Zurich, Switzerland.

Steven Ongena is  a senior chair at the Swiss Finance Institute and a professor at the University of Zurich, Switzerland, a research professor at KU Leuven, Belgium, and a research fellow in financial economics of CEPR, UK. 

Inhalt

Contents 6
List of Figures 7
List of Tables 10
1 Introduction 11
2 Securitization and Lending 15
2.1 Data 16
2.2 Methodology 21
2.3 Securitization and Bank Business Models 22
2.4 Types of Securitization and Asymmetric Information 28
2.4.1 Subprime Mortgage Lending 29
2.4.2 Corporate Lending 33
2.4.3 Covered Bonds 36
2.5 Securitization and Financial Stability 37
2.6 Conclusion 40
3 Interest Rate Risk 41
3.1 Data 42
3.2 Methodology 44
3.3 Are Banks Exposed to Interest Rate Risk? 45
3.3.1 Which Factors Determine the Choice of Adjustable or Fixed-Rate Debt? 46
3.4 How and Why Do Banks Manage Interest Rate Risk? 48
3.5 What Are the Consequences of Banks' Decision to Manage Interest Rate Risk? 60
3.5.1 For the Transmission of Monetary Policy 60
3.5.2 For Their Borrowers 64
3.6 Conclusion 65
4 Credit Risk 71
4.1 Credit Default Swap Contracts 73
4.2 Data 75
4.3 Methodology 77
4.4 Why and How Do Banks Trade Credit Risk Transfer Instruments 79
4.5 What Are the Consequences of CDS Trading for Other Credit Markets? 84
4.5.1 Syndicated Loans 85
4.5.2 Corporate Bonds 90
4.6 How Does CDS Trading Affect the Referenced Firm? 91
4.7 How Do Referenced Firms Respond to Being CDS-Referenced Firms? 100
4.8 How Does CDS Trading Affect Firms with Economic Links to Referenced Firms (Spillovers)? 102
4.9 Conclusion 103
5 Collateral and Lending 115
5.1 Data 116
5.2 Methodology 123
5.3 Types of Collateral 124
5.3.1 Real Estate Collateral and Firm Creation 124
5.3.2 Real Estate Collateral and Credit 129
5.3.3 Movable Collateral and Credit 132
5.3.4 Patent Collateral and Credit 135
5.4 Collateral and Law 136
5.5 Conclusion 141
6 Global Banking 143
6.1 The International Transmission of Financial Shocks 145
6.2 Data 148
6.3 Methodologies 151
6.4 How Does Interbank Integration Affect Borrowing Constraints, Loan Rates, and Output? 154
6.5 How and Why Do Banks Establish Foreign Affiliates: Branches or Subsidiaries? 159
6.6 How Does a Bank's Global Activity Affect Its Sensitivity to Local Funding Shocks? 162
6.7 How Do Banks Change Their Local Lending in Response to Shocks to Their Foreign Funding Sources? (Inward Transmission) 164
6.8 How Do Banks Change Their Foreign Lending in Response to Shocks to Their Local Funding Sources? (Outward Transmission) 170
6.9 How Does Global Banking Interact with Macroprudential Regulation? 175
6.10 Conclusion 176
7 FinTech and the Future of Banking 189
7.1 Data 191
7.2 Methodology 195
7.3 Technology, Bank Regulation, and the Rise of FinTech 195
7.3.1 Technological Advances 195
7.3.2 Bank Regulation 201
7.4 Banks vs. FinTech: Substitutes or Complements 202
7.5 The Liability Side of FinTech 206
7.5.1 Conclusion 209
8 Conclusion 210
References 213
Index 226

Produkt-Details

• Erscheint lt. Verlag: 13.11.2019
• Reihe/Serie: Palgrave Macmillan Studies in Banking and Financial Institutions
• Reihe/Serie: Palgrave Macmillan Studies in Banking and Financial Institutions
• Zusatzinfo: XI, 221 p. 11 illus., 7 illus. in color.
• Sprache: englisch
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management ► Finanzierung
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management ► Logistik / Produktion
• Themenwelt: Betriebswirtschaft / Management ► Spezielle Betriebswirtschaftslehre ► Bankbetriebslehre
• Schlagworte: Banking • banking and asset pricing • Central Banks • credit risk • financial innovations • financial regulations • FinTech • Global Banking • interest rate risk • Microeconometrics of Banking • modern financial markets • Securitization • Shadow Banking
• ISBN-10: 3-030-26844-6 / 3030268446
• ISBN-13: 978-3-030-26844-2 / 9783030268442