Recommended articles: Banking Risk

McKinsey:

• Bracing for consolidation in Asia–Pacific banking: The quest for scale. To emerge from a period of potential consolidation, Asia’s banks must reinvent themselves or risk disappearing.
• Lessons from leaders in Latin America’s retail banking market. A look at how leading banks outperform in the world’s fastest-growing banking market.

BIS Papers:

• The costs and benefits of bank capital - a review of the literature.
• Measuring contagion risk in international banking.

VOXEU studies:

• Modern money theory and its implementation and challenges: The case of Japan. Modern monetary theory (MMT) has recently gained prominence in light of doubts about the effectiveness of monetary policy in addressing economic shortfalls. This column assesses the implications of implementing the theory’s policy prescriptions, and the challenges it presents in the case of Japan – an economy that some have argued has already been subject to such policy. Japan’s labour shortages and low inflation mean modern monetary theory’s fiscal stimulus suggestions may be harder to implement than they initially seem.
• Monetary policy and bank equity values in a time of low and negative interest rates. The effects of interest rate surprises on banks are different when nominal interest rates are very low. This column reveals how, in ‘normal’ times, policy rate announcements that are below market expectations tend to boost banks’ stock prices on average. When interest rates are very low, however, there is a reversal of this effect, with negative rate surprises reducing banks’ stock prices. This negative impact is larger for banks whose funding relies more on retail deposits than on other sources of funding.