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Are changes in financial structure extending safety nets?

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  • William R. White

Abstract

Significant attention has recently been directed to the optimal policy response when financial excesses threaten. This paper rather addresses issues pertinent to the appropriate policy response once financial difficulties have actually materialised. It begins with some empirical evidence concerning recent changes in financial structure (marketisation, globalisation and consolidation) and documents the rise in the number and variety of episodes of financial instability. The paper then goes on to examine the rationale for government intervention (use of safety net instruments) to reduce the costs of such financial instability, and cautiously concludes that the use of a number of such instruments has been on the rise. Moreover, the balance among them has also been changing. An attempt is then made to link these evolving policy responses back to the underlying changes in financial structure identified earlier.

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  • William R. White, 2004. "Are changes in financial structure extending safety nets?," BIS Working Papers 145, Bank for International Settlements.
  • Handle: RePEc:bis:biswps:145
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    References listed on IDEAS

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    Cited by:

    1. Jan Cimburek & Miroslav Kollár & Lubos Komárek & Pavel Rezábek, 2009. "Resolving Nonperforming Assets in the Czech Republic: Theory and Practice," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 7(3), pages 21-28, October.
    2. Ilhyock Shim & Goetz Von Peter, 2007. "Distress Selling and Asset Market Feedback," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 16(5), pages 243-291, December.
    3. Fernando Alexandre & Pedro Bação, 2005. "Monetary policy and asset prices: the investment channel," NIPE Working Papers 3/2005, NIPE - Universidade do Minho.
    4. Claudio Borio, 2007. "Change and Constancy in the Financial System: Implications for Financial Distress and Policy," RBA Annual Conference Volume (Discontinued), in: Christopher Kent & Jeremy Lawson (ed.),The Structure and Resilience of the Financial System, Reserve Bank of Australia.
    5. Prasanna Gai & Sujit Kapadia & Stephen Millard & Ander Perez, 2008. "Financial Innovation, Macroeconomic Stability and Systemic Crises," Economic Journal, Royal Economic Society, vol. 118(527), pages 401-426, March.
    6. Jan Cimburek & Miroslav Kollár & Lubos Komárek & Pavel Rezábek, 2009. "Resolving Nonperforming Assets in the Czech Republic: Theory and Practice," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 7(03), pages 21-28, October.
    7. William R. White, 2014. "The Prudential Regulation of Financial Institutions: Why Regulatory Responses to the Crisis Might Not Prove Sufficient," OECD Economics Department Working Papers 1108, OECD Publishing.
    8. Guonan Ma, 2007. "Who Pays China's Bank Restructuring Bill?," Asian Economic Papers, MIT Press, vol. 6(1), pages 46-71, Winter.
    9. Bank for International Settlements, 2005. "The role of ratings in structured finance: issues and implications," CGFS Papers, Bank for International Settlements, number 23, december.
    10. Nadežda Sinenko & Deniss Titarenko & Mikus Arinš, 2013. "The Latvian financial stress index as an important element of the financial system stability monitoring framework," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 13(2), pages 85-110, December.
    11. Miroslav Kollár & Luboš Komárek, 2009. "Možnosti řešení problematických aktiv komerčních bank [Selective Approaches and Experiences with Problematic Assets in Banking Sector]," Politická ekonomie, Prague University of Economics and Business, vol. 2009(5), pages 601-621.
    12. Blaise Gadanecz & Kaushik Jayaram, 2009. "Measures of financial stability - a review," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Proceedings of the IFC Conference on "Measuring financial innovation and its impact", Basel, 26-27 August 2008, volume 31, pages 365-380, Bank for International Settlements.
    13. repec:ces:ifodic:v:7:y:2009:i:3:p:14567090 is not listed on IDEAS
    14. Claudio E. V. Borio, 2004. "Market distress and vanishing liquidity: anatomy and policy options," BIS Working Papers 158, Bank for International Settlements.
    15. Heinrich, Gregor, 2007. "El seguro de depósito dentro de la red de seguridad financiera [Deposit insurance within the financial safety-net]," MPRA Paper 47444, University Library of Munich, Germany.
    16. William R. White, 2012. "Credit Crises and the Shortcomings of Traditional Policy Responses," OECD Economics Department Working Papers 971, OECD Publishing.
    17. William R. White, 2010. "The Mayekawa Lecture: Some Alternative Perspectives on Macroeconomic Theory and Some Policy Implications," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 28, pages 35-58, November.
    18. Rakesh Mohan, 2008. "The Role of Fiscal and Monetary Policies in Sustaining Growth with Stability in India," Working Papers id:1778, eSocialSciences.

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