RD News 8March12

• CCMR: Inadequate Cost-Benefit Analysis Opens Dodd-Frank Rulemaking to Challenge and Delay
• Over a quarter of the 192 rules have no cost-benefit analysis at all.
• Over a third have entirely non-quantitative cost-benefit analysis.
• The majority of the 50 rules that do contain quantitative analysis limit it to administrative and similar costs, but ignore the Rule’s expected broader economic impact.

• Deutsche Bundesbank: Executive board composition and bank risk taking
• The socioeconomic composition of executive boards impacts banks’ risk taking, with more risk taking at banks managed by younger executives and banks with a higher proportion of female board members, and less risk taking at banks with a higher proportion of executives with PhDs.
• The first of these is statistically significant and with an economically large effect; the second is found to have an economically marginal effect; while the third is statistically significant but with a small effect.
• The study was conducted using data from all German banks between 1994 and 2010.

• FSB: Technical features of the Legal Entity Identifier
• Work is proceeding intensively under five workstreams - each having its own mandate and deliverables:
• governance;
• operational model;
• scope, confidentiality and access;
• funding;
• implementation and phasing.

• Kiyohiko G Nishimura(Dep Gov, Bank of Japan): What should we learn from the Eurozone Crisis? A regulatory-reform perspective
• Increasing capital buffers may contribute to maintaining a bank’s solvency over the medium term, but increasing banks’ capital burden in a stressful time might create an adverse feedback loop of intensified capital constraints, weak bank lending and economic slowdown, thus accelerating the bank deleveraging that could lead to a devastating credit crunch.
• Regulatory changes often have unintended and sometimes considerable cross-border impacts in the increasingly integrated world of finance, as evidenced by the leveraging rule and other regulatory changes of 2004 on European financial institutions, and now possibly by the Volcker Rule on non-U.S. financial institutions.

• IMF: Bank Asset Quality in Emerging Markets: Determinants and Spillovers
• There are significant links between banks’ asset quality, credit and macroeconomic aggregates.
• Lower economic growth, an exchange rate depreciation, weaker terms of trade and a fall in debt-creating capital inflows reduce credit growth while loan quality deteriorates.
• This analysis was used in th Global Financial Stability Report (Sept11) to help evaluate the sensitivity of banks’ capital adequacy ratios to macroeconomic and funding cost shocks.