Financial regulation | EPFL Graph Search

Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the stability and integrity of the financial system. This may be handled by either a government or non-government organization. Financial regulation has also influenced the structure of banking sectors by increasing the variety of financial products available. Financial regulation forms one of three legal categories which constitutes the content of financial law, the other two being market practices and case law. History In the early modern period, the Dutch were the pioneers in financial regulation. The first recorded ban (regulation) on short selling was enacted by the Dutch authorities as early as 1610. Aims of regulation The objectives of financial regulators are usually:

market confidence – to maintain confidence in the financial system
financial stability – contributing to the protectio

Essays in Banking and Financial Regulation

Susanne Johanna Petronella Léonie Vissers

This thesis examines how banks choose their optimal capital structure and cash reserves in the presence of regulatory measures. The first chapter, titled Bank Capital Structure and Tail Risk, presents a bank capital structure model in which bank assets are subject to both diffusion and tail risk. Of these two types of risk, tail risk causes uninsured deposits to be risky, as the bank's asset value can unexpectedly fall below the value of deposits in case of default. The model shows that tail risk, rather than diffusion risk, is the main driver of the risk on deposits when the bank is unregulated and of the endogenous deposit insurance premium when the bank is regulated. Keeping total volatility constant, the model shows that a high tail risk component leads to higher credit spreads, default risk, and magnitude of bank losses in default than a high diffusion risk component.The second chapter, titled Bank Regulation and Market Discipline in the Presence of Risk-Taking Incentives, presents a bank capital structure model in which equity holders can increase asset risk once debt is in place. I study the effects of capital requirements and subsidized deposit insurance on the bank's privately optimal funding and operational risk level. The model predicts that there are synergetic effects of regulation and market discipline. When the regulator sets the capital charge and deposit insurance premium payments sufficiently high for a risky portfolio, the bank commits to the low-risk asset portfolio by setting a lower leverage ratio and substituting market debt for deposits. This market discipline effect disappears when the regulatory costs become too high. In the third chapter that is titled Dividend Restrictions and Asymmetric Information, we develop a dynamic model of a bank whose management has superior information about the impact of a pending shock to the bank's cash holdings and can signal the bank's type through its dividend policy. Banks that will be adversely affected by the shock have incentives to pool with unaffected banks to increase their market value. To avoid being mimicked, the unaffected banks can credibly signal via a more aggressive payout strategy. Dividend payout restrictions have the potential to prevent a separating equilibrium from forming. This leads to the bad type adopting a more aggressive payout policy with a higher risk of default but mitigates the distortion of the good type's policy. We identify a number of scenarios where this trade-off presents an opportunity for regulatory intervention and some where it does not.

EPFL2021

Adaptive approaches for the improvement of public transport in Latin American Cities

Regina Witter

Apart from the best-practice cases where public administration has been able to manage the transit service network and implement a strong regulation system, in the majority of Latin American cities public urban transport is supplied by a great number of quasi-artisan operators in an almost deregulated context. The private providers secure an intense but essentially deficient and unbalanced supply. With the growth of the cities and thus, increasing trvel distances, the deficiency of the public transport system becomes more problematic, especially for the lower income groups living on the outskirts. Moreover, the extension of the service, supplied in an increasing number of small vehicles competing on the streets, effects the worsening of traffic congestion and pollution. These problems arise as soon as the public authorities are not able to regulate the transport industry, not to mention to provide an efficient transport system by themselves. The lack of technical skills to plan, regulate and control the services but also weak political motivation are the primary obstacles to solve the poblem. The political and social costs of major regulatory changes often discourage politicans empowered, looking for more vote effective activities and measures. In order to implement an efficient regulation system, a stepwise, adaptive procedure has to be applied, securing over years significant improvements and the maturing of the transport industry.

Elsevier2007

Inverse metabolic engineering: a strategy for directed genetic engineering of useful phenotypes

Vassily Hatzimanikatis

A review. The classical method of metabolic engineering, identifying a rate-detg. step in a pathway and alleviating the bottleneck by enzyme overexpression, has motivated much research but has enjoyed only limited practical success. Intervention of other limiting steps, of counter-balancing regulation, and of unknown coupled pathways often confounds this direct approach. Here the concept of inverse metabolic engineering is codified and its application is illustrated with several examples. Inverse metabolic engineering means the elucidation of a metabolic engineering strategy by: first, identifying, constructing, or calcg. a desired phenotype; second, detg. the genetic or the particular environmental factors conferring that phenotype; and third, endowing that phenotype on another strain or organism by directed genetic or environmental manipulation. This paradigm has been successfully applied in several contexts, including elimination of growth factor requirements in mammalian cell culture and increasing the energetic efficiency of microaerobic bacterial respiration. [on SciFinder (R)]

2002

Essays in Banking and Financial Regulation

Susanne Johanna Petronella Léonie Vissers

EPFL2021