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2018 | Book

Introduction Read chapter Read first chapter

Financial Institutions in the Global Financial Crisis

The Role of Financial Derivatives, Bank Capital, and Clearing and Custody Services

Author: Dr. Shaofang Li

Publisher: Springer Singapore

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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About this book

This book examines the role of financial institutions in the financial markets during normal times, as well as during the global financial crisis. Chapter 1 offers a brief introduction to the research topics in the book, while Chapter 2 discusses the impact of financial derivatives on risk exposures of BHCs. Chapter 3 then investigates whether and how different types of bank capital affect bank lending and whether this relation changes in times of the global financial crisis. Chapter 4 adds to the scant information on competitive landscape in the clearing and settlement industry. Lastly, Chapter 5 provides a summary and discussion of the findings and presented.

Table of Contents

Frontmatter
Chapter 1. Introduction
Abstract
Financial institutions are special as they provide a variety of financial services to individuals and other institutions, and the influence of financial institutions is fundamental to the development of economy. The purpose of this book is to study the role of financial institutions in the financial markets in normal times and during the global financial crisis. The global financial crisis, also known as the subprime crisis or the credit crisis, originated in the U.S. subprime mortgage market and spread to other financial markets and countries, and is considered to be the worst financial crisis since the Great Depression in 1930s. The global financial crisis led to a huge loss of economic output and financial wealth.
Shaofang Li
Chapter 2. The Use of Financial Derivatives and Risks of U.S. Bank Holding Companies
Abstract
This chapter examines the impact of financial derivatives on systematic risk of publicly listed U.S. bank holding companies (BHCs) from 1997 to 2012. We find that the use of financial derivatives is positively and significantly related to BHCs’ systematic risk exposures. Higher use of interest rate derivatives, exchange rate derivatives, and credit derivatives corresponds to the greater systematic interest rate risk, exchange rate risk, and credit risk. The positive relationship between derivatives and risks persists for derivatives for trading as well as for derivatives for hedging. We also analyze the role of BHCs’ size and capital and the impact of the global financial crisis on the relationship between derivatives and risks.
Shaofang Li
Chapter 3. Quality of Bank Capital and Bank Lending Behaviour During the Global Financial Crisis
Abstract
Using a worldwide bank sample from 2000 to 2010, this chapter analyzes the determinants of bank lending behavior during the global financial crisis, highlighting the role of bank capital. It reveals that the high quality of the bank funding strategy (tier 1 bank capital and retail deposits) and prevalent government backing were crucial to continuous bank lending during the crisis period.
Shaofang Li
Chapter 4. Competition in the Clearing and Settlement Industry
Abstract
This chapter empirically analyzes the competitive landscape within the clearing and settlement industry. Using the panel data of 46 clearing and settlement institutions from 23 countries we confirm that competition between clearing and settlement institutions is limited. We show that competition increases with the institutional size, with technological development and after horizontal mergers but not after vertical mergers. Additionally, we find that competition in clearing and settlement is higher in the U.S. than in Europe and higher during the global financial crisis compared to normal times.
Shaofang Li
Chapter 5. General Discussion and Conclusion
Abstract
This chapter gives a general discussion on the main findings of this book. The primary objective of this study is to evaluate the role of financial derivatives, bank capital, and clearing and settlement services in normal times and during the global financial crisis. This chapter is structured as follows; first, it briefly summarizes the findings in each chapter of the main findings and provides a systematic overview of them. Second, it discusses the main overarching theoretical and empirical contributions. The final part briefly concludes the findings.
Shaofang Li
Backmatter
Metadata
Title
Financial Institutions in the Global Financial Crisis
Author
Dr. Shaofang Li
Copyright Year
2018
Publisher
Springer Singapore
Electronic ISBN
978-981-10-7440-0
Print ISBN
978-981-10-7439-4
DOI
https://doi.org/10.1007/978-981-10-7440-0