Working Paper: CEPR ID: DP13350
Authors: Tobias Adrian; John Kiff; Hyun Song Shin
Abstract: The financial system has undergone far-reaching changes since the global financial crisis of 2008. We cast those changes in terms of shifts in the manner in which financial intermediaries manage their balance sheets. We also discuss the regulatory reform agenda, and we review the impact of regulations on market liquidity and credit availability. The current evidence suggests that the financial system has become safer, at limited unintended cost.
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Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher bank capital (G21) | Lower cost of borrowed funds (G32) |
| Lower leverage (G19) | Higher lending growth (G21) |
| Post-crisis regulatory reforms (G28) | Safer financial system (G28) |
| Market-to-book ratios (G32) | Perceived creditworthiness (G21) |
| Low market valuations (G19) | Higher market leverage (G19) |
| Higher market leverage (G19) | Constrained banks' lending capacities (G21) |