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B8347 Financial Crises and Regulatory Responses
B8347 Financial Crises and Regulatory Responses Course Description
There have been more than a dozen financial crises in the world since 1980, including six in the United States alone. Major financial disruption was averted until the crisis of 2007-09. What are the common elements among these crises, what are the differences? In some instances, crises have brought about significant regulatory reform. Yet how is it that financial crises seem to recur with such frequency? And recur despite regulatory
Using a mix of economics and law-related materials, we plan to address these themes:
1) Are financial crises foreseeable or unforeseeable? Do they arise from processes internal to the financial sector (such as the “leverage cycle”) or from external events, such as changes in the political landscape that change the terms of financial globalization?
2) Are there more or less stable structures for the financial system? The financial system aims to match suppliers of capital (savers) and users of capital (business users and consumers). From a stability point of view, is such financial intermediation better done through financial institutions or through markets?
3) Stable structures, part II: Is there an optimum firm size? Should certain financial market activities be combined (for efficiency and diversification) or separated?
4) Are we better off with rigorous schemes of crisis avoidance or efficient resolution mechanisms, if long periods of financial stability inevitably lead to increased leverage, asset price inflation and a resulting steeper crash? Perhaps we are better off by focusing
attention on mopping up smaller, more frequent crashes?
5) Do recurrent crises flow from the political constraints on optimum regulation? There are two facets to this question. First, is the desire of incumbent political leaders to promote reelection chances by producing economic growth or greater home ownership, which favors expansionary credit policies. Second, is the firm-level competition within the financial sector to protect and expand rents.
6) The financial environment is driven by the interplay of legislation, regulation, governance and monetary policy. To what extent can independent central bank intervention through monetary policy correct for legislative or regulatory debility?
7) Do the goals of differently tasked regulators conflict in a way that may undermine systemic stability? How does the disclosure focus of securities regulators fit with the safety and soundness goals of financial regulators, as evidenced for example in recent Bank of America and Merrill merger or the manipulation of Libor?
8) International coordination and its limits: do the concessions made to obtain sufficient national buy-in to achieve a widespread international regime (necessary to avoid freeriding) undermine the effectiveness of the international regulatory architecture? One example where this issue has arisen prominently in recent years is the zero risk-weighting on all OECD sovereign debt under the Basel accords.
Spring 2014 sections:
2014-2015 No Free Lunch Seminar Series
Larry Glosten, S. Sloan Colt Professor of Banking and International Finance, presents Are Markets Rigged?
2014 Financial Studies Conference
Videos and photos from our 2014 conference: "The Quest for Yield."
Columbia Business School
Uris Hall 809, 3022 Broadway
New York, NY 10027
January 28, 2015The Program for Financial Studies' No Free Lunch Seminar Series was a great success in 2014! Watch the two most viewed videos: Neng Wang's Valuing Private Equity and Emi Nakamura's Is China Slowing?
December 17, 2014"Capital Structure in Major Corporations" video and photographs, featuring Martin Schroeter, CFO of IBM, and Professor Laurie Simon Hodrick, are now available
December 16, 2014The Fourth Annual Program for Financial Studies Conference was a great success. Videos and photographs of the event are now available
November 20, 2014The No Free Lunch November 18 recordings are now available
July 8, 2014If the recent New York Times article sparked your interest in James Gorman, watch this video of his keynote at our conference
January 16, 2013The No Free Lunch Seminar Series has been heralded as a best practice by BizEd magazine
In the News
January 26, 2014Professor Mark Broadie discusses putting measurement on Golf.com
January 23, 2015Professor Charles Jones’ research on financial markets is cited by Forbes.com>
January 22, 2015Professor Suresh Sundaresan presented on Indian Banks at the South Asia Institute at Columbia University>
January 21, 2015Executive Advisory Board Member Candace Browning forecasts the market in the LA Times
December 15, 2014Professor Charles Calomiris' lecture at Georgetown University – School of Foreign Service in Qatar is featured by the Qatar Foundation
December 9, 2014Executive Advisory Board Member Patricia Moraes spoke at the Brazil Opportunities Conference in Sao Paulo, Brazil on December 2-4
November 19, 2014Professor Andrew Ang was the featured speaker at the CFA Society Toronto on November 5
October 31, 2014Professor Charles Calomiris discusses the outlook of the Federal Reserve on Bloomberg Businessweek
October 20, 2014Executive Advisory Board Member Nicholas Galluccio comments on the banking sector on CNBC
October 16, 2014Professor Martin Oehmke discusses credit default swaps in Columbia Ideas at Work
October 14, 2014Professor Mark Broadie is mentioned in Golf Analytics
October 13, 2014Executive Advisory Board Member Candace Browning discusses women's leadership in Young or Mature. BofA Empowers Women
October 8, 2014Professor Andrew Ang's pension research is cited in Chief Investment Officer
October 6, 2014Executive Advisory Board Member Christian Mariager will be the keynote speaker at the 2014 CBS MBA Alumni Society Anniversary in Frederiksburg, Denmark on November 1
October 1, 2014Professor Paul Glasserman will present Carnegie Mellon's 7th Nash Distinguished Lecture in Quantitative Finance in Pittsburgh, PA on October 6