CEU Electronic Theses and Dissertations, 2012
| Author | Saghy, Balazs |
|---|---|
| Title | Banking Consolidation in the US in the wake of the Financial Crisis of 2007-2009 |
| Summary | In my thesis I focus on the process of banking sector consolidation in the United States, and its implications for regulatory reactions to the financial crisis between 2007-2009. The leading financial institutions have been growing in size and influence since the collapse of the Bretton Woods system, and this trend did not change with the crisis - despite of these companies’ immediate involvement. Why did governmental actors bail out large financial institutions, if it is likely to retain them as possible sources of systemic distress in the future? I approach this question with an institutional research taking into account the specific features of the industry, which shape the structure and the competition in banking; and assess how the authorities addressed the adverse incentives that derive from these specificities, in the wake of the financial crisis. The Dodd-Frank Act and Basel III favors macroprudential regulation, just as mainstream academics: I show its limitations, as it manifests concretely in the Basel III capital standards. I show that despite of that the systemically important banks already comply with Basel III requirements, there is no reason to accept it as a comforting solution of the too-big-to-fail problem. I identify the potential signaling power of the countercyclical capital buffer proposed to be determined by national authorities, and the disregard for correlated risk portfolios across banks as major fallacies of Basel III, that would allow banks to destabilize the financial system once again. |
| Supervisor | Csaba, Laszlo |
| Department | Political Science MA |
| Full text | https://www.etd.ceu.edu/2012/saghy_balazs.pdf |
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