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Global Bank Regulation - 1st Edition - ISBN: 9780126410037, 9780080925806

Global Bank Regulation

1st Edition

Principles and Policies

Authors: Heidi Mandanis Schooner Michael Taylor
Hardcover ISBN: 9780126410037
eBook ISBN: 9780080925806
Imprint: Academic Press
Published Date: 22nd October 2009
Page Count: 352
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Global Bank Regulation: Principles and Policies covers the global regulation of financial institutions. It integrates theories, history, and policy debates, thereby providing a strategic approach to understanding global policy principles and banking. The book features definitions of the policy principles of capital regularization, the main justifications for prudent regulation of banks, the characteristics of tools used regulate firms that operate across all time zones, and a discussion regarding the 2007-2009 financial crises and the generation of international standards of financial institution regulation. The first four chapters of the book offer justification for the strict regulation of banks and discuss the importance of financial safety. The next chapters describe in greater detail the main policy networks and standard setting bodies responsible for policy development. They also provide information about bank licensing requirements, leading jurisdictions, and bank ownership and affiliations. The last three chapters of the book present a thorough examination of bank capital regulation, which is one of the most important areas in international banking. The text aims to provide information to all economics students, as well as non-experts and experts interested in the history, policy development, and theory of international banking regulation.

Key Features

  • Defines the over-arching policy principles of capital regulation
  • Explores main justifications for the prudent regulation of banks
  • Discusses the 2007-2009 financial crisis and the next generation of international standards of financial institution regulation
  • Examines tools for ensuring the adequate supervision of a firm that operates across all time zones
  • Readership

    Academics and advanced-level students interested in the theory, history, and policy development of international banking regulation

    Table of Contents

    Introduction: The Global Financial System and the Problems of Regulation

    1. The Changing Nature of Banks


    Money, Credit Creation, and Fractional Reserve Banking

    Financial Innovation and the Changing Nature of Banks

    Three Distinctive Features of Modern Banking


    Further Reading

    2. Panics, Bank Runs, and Coordination Problems

    The Structure of Banks’ Balance Sheets

    Coordination Problems and Bank Runs

    Panic and Contagion in Modern Financial Systems

    Free Riders and Regulation


    Further Reading

    3. Collapsing Dominos and Asset Price Spirals

    Collapsing Dominos

    Asset Price Spirals

    The Global Financial Crisis of 2007–2009


    Further Reading

    4. The Financial Safety Net and Moral Hazard

    The Financial Safety Net

    Moral Hazard

    Is There an Alternative?


    Further Reading

    5. Sources of Financial Regulation

    National Laws

    International Law


    Further Reading

    6. Bank Licensing and Corporate Governance

    The Purpose of Bank Licensing

    The Fundamentals of Bank Licensing

    Fitness and Propriety of Bank Management

    Significant Changes in Ownership

    Choice of Bank Charter

    Cross-Border Issues

    Principles of Sound Corporate Governance

    Sarbanes-Oxley Act of 2002


    Further Reading

    7. Bank in Corporate Groups: Ownership and Affiliation

    Bank-Commerce Linkages

    The Separation of Banking and Finance

    Changes to Structural Regulation of the Combination of Banking and Other Financial Services


    Further Reading

    8. The Rationale for Bank Capital Regulation

    Why Regulate Bank Capital?

    Leverage Ratios

    Risk-Weighted Capital

    Criticisms of the Basel Capital Accord


    9. The New Capital Adequacy Framework: Basel II and Credit Risk

    The Standardized Approach

    The Internal Ratings-Based (IRB) Approaches

    Dealing with Financial Innovation


    Further Reading

    10. The New Capital Adequacy Framework: Basel II and Other Risks

    Market Risk

    Operational Risks

    Pillar 2 Risks


    Further Reading

    11. Direct Limits on Banks’ Risk Taking

    Credit Concentration Risk

    Liquidity Risk


    12. Consolidated Supervision and Financial Conglomerates

    What Is Consolidated Supervision?

    The Need for Consolidated Supervision

    Consolidated Supervision of Cross-Border Banks

    Financial Conglomerates


    13. Anti-Money Laundering

    What Is Money Laundering?

    The Impact on Banks

    International Response

    Banco Delta Asia Case Study


    Further Reading

    14. Bank Insolvency

    The Goals and Types of Bank Insolvency Regimes

    Legal Framework for Bank Insolvency

    Determination of Insolvency

    Administration Orders and Conservatorships



    Further Reading

    15. Institutional Structures of Regulation

    Institutional and Functional Regulation

    Rise of the Integrated Regulator

    Twin Peaks (Objectives) Approach

    Role of the Central Bank in Bank Supervision

    Evaluation of Structural Reforms


    Further Reading

    16. Regulation After the Global Financial Crisis

    The Causes of the Crisis

    Rethinking the Assumptions of Regulation

    New Directions in Capital Adequacy

    More Radical Options

    The International Dimension


    Appendix: Introduction to Regulation and Market Failure



    No. of pages:
    © Academic Press 2009
    22nd October 2009
    Academic Press
    Hardcover ISBN:
    eBook ISBN:

    About the Authors

    Heidi Mandanis Schooner

    Affiliations and Expertise

    Columbus School of Law, The Catholic University of America, Washington D.C.

    Michael Taylor

    Affiliations and Expertise

    International Monetary Fund


    "This wide-ranging and authoritative book, written by two distinguished analysts of financial regulation, is a compelling read and of great value to regulators, financial practitioners and students alike. It is an excellent tour de force of the key issues in bank regulation which is set in a strong analytical framework. In the light of the global financial crisis, it makes a compelling case for an internationally coordinated approach to bank regulation."--David T. Llewellyn, Loughborough University

     "A fascinating and erudite introduction to the policies underlying bank supervision and the complexities of implementing those policies in an international environment based on national regulatory systems. Schooner and Taylor are among the world’s leading experts on banking regulation and their text will be an invaluable resource to students and practitioners for years to come." --Howell E. Jackson, Harvard Law School

    "Heidi Schooner and Michael Taylor have produced a work of the highest quality which is balanced and focused with the right amount of detail.  considerable thought has obviously been given to design and structure.  All relevant topics received expert attention."  "This book will become the leading point of reference for those who need to understand bank regulation within the global context.  I am happy to fully recommend it without hesitation."  -- Andrew Campbell, School of Law, University of Leeds.  Full review - Journal of International Banking Law and Regulation, Volume 26, Issue 3, 2011.

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