Banking and trading:
Saved in:
| Main Author: | |
|---|---|
| Format: | Electronic eBook |
| Language: | English |
| Published: |
[Washington, D.C.]
International Monetary Fund
©2012
|
| Series: | IMF working paper
WP/12/238 |
| Subjects: | |
| Online Access: | FAW01 FAW02 FLA01 |
| Item Description: | Title from PDF title page (IMF Web site, viewed Oct. 5, 2012). - "Research Department.". - "October 2012." We study the effects of a bank's engagement in trading. Traditional banking is relationship-based: not scalable, long-term oriented, with high implicit capital, and low risk (thanks to the law of large numbers). Trading is transactions-based: scalable, shortterm, capital constrained, and with the ability to generate risk from concentrated positions. When a bank engages in trading, it can use its 'spare' capital to profitablity expand the scale of trading. However, there are two inefficiencies. A bank may allocate too much capital to trading ex-post, compromising the incentives to build relationships ex-ante. And a bank may use trading for risk-shifting. Financial development augments the scalability of trading, which initially benefits conglomeration, but beyond some point inefficiencies dominate. The deepending of the financial markets in recent decades leads trading in banks to become increasingly risky, so that problems in managing and regulating trading in banks will persist for the foreseeable future. The analysis has implications for capital regulation, subsidiarization, and scope and scale restrictions in banking Includes bibliographical references |
| Physical Description: | 48 pages |
| ISBN: | 9781475512472 1475512473 |
Staff View
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| 500 | |a Title from PDF title page (IMF Web site, viewed Oct. 5, 2012). - "Research Department.". - "October 2012." | ||
| 500 | |a We study the effects of a bank's engagement in trading. Traditional banking is relationship-based: not scalable, long-term oriented, with high implicit capital, and low risk (thanks to the law of large numbers). Trading is transactions-based: scalable, shortterm, capital constrained, and with the ability to generate risk from concentrated positions. When a bank engages in trading, it can use its 'spare' capital to profitablity expand the scale of trading. However, there are two inefficiencies. A bank may allocate too much capital to trading ex-post, compromising the incentives to build relationships ex-ante. And a bank may use trading for risk-shifting. Financial development augments the scalability of trading, which initially benefits conglomeration, but beyond some point inefficiencies dominate. The deepending of the financial markets in recent decades leads trading in banks to become increasingly risky, so that problems in managing and regulating trading in banks will persist for the foreseeable future. The analysis has implications for capital regulation, subsidiarization, and scope and scale restrictions in banking | ||
| 500 | |a Includes bibliographical references | ||
| 650 | 7 | |a Banks and banking |2 fast | |
| 650 | 7 | |a Commerce |2 fast | |
| 650 | 7 | |a BUSINESS & ECONOMICS / Finance |2 bisacsh | |
| 650 | 4 | |a Bank | |
| 650 | 4 | |a Wirtschaft | |
| 650 | 4 | |a Banks and banking | |
| 650 | 4 | |a Commerce | |
| 700 | 1 | |a Ratnovski, Lev |e Sonstige |4 oth | |
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| dewey-hundreds | 300 - Social sciences |
| dewey-ones | 332 - Financial economics |
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| dewey-search | 332.1 |
| dewey-sort | 3332.1 |
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| discipline | Wirtschaftswissenschaften |
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| id | DE-604.BV043786914 |
| illustrated | Not Illustrated |
| indexdate | 2024-07-10T07:35:07Z |
| institution | BVB |
| isbn | 9781475512472 1475512473 |
| language | English |
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| physical | 48 pages |
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| publishDate | 2012 |
| publishDateSearch | 2012 |
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| publisher | International Monetary Fund |
| record_format | marc |
| series2 | IMF working paper |
| spelling | Boot, Arnoud W. A. 1960- Verfasser aut Banking and trading prepared by Arnoud W.A. Boot and Lev Ratnovski [Washington, D.C.] International Monetary Fund ©2012 48 pages txt rdacontent c rdamedia cr rdacarrier IMF working paper WP/12/238 Title from PDF title page (IMF Web site, viewed Oct. 5, 2012). - "Research Department.". - "October 2012." We study the effects of a bank's engagement in trading. Traditional banking is relationship-based: not scalable, long-term oriented, with high implicit capital, and low risk (thanks to the law of large numbers). Trading is transactions-based: scalable, shortterm, capital constrained, and with the ability to generate risk from concentrated positions. When a bank engages in trading, it can use its 'spare' capital to profitablity expand the scale of trading. However, there are two inefficiencies. A bank may allocate too much capital to trading ex-post, compromising the incentives to build relationships ex-ante. And a bank may use trading for risk-shifting. Financial development augments the scalability of trading, which initially benefits conglomeration, but beyond some point inefficiencies dominate. The deepending of the financial markets in recent decades leads trading in banks to become increasingly risky, so that problems in managing and regulating trading in banks will persist for the foreseeable future. The analysis has implications for capital regulation, subsidiarization, and scope and scale restrictions in banking Includes bibliographical references Banks and banking fast Commerce fast BUSINESS & ECONOMICS / Finance bisacsh Bank Wirtschaft Banks and banking Commerce Ratnovski, Lev Sonstige oth International Monetary FundXXbResearch Department Sonstige oth |
| spellingShingle | Boot, Arnoud W. A. 1960- Banking and trading Banks and banking fast Commerce fast BUSINESS & ECONOMICS / Finance bisacsh Bank Wirtschaft Banks and banking Commerce |
| title | Banking and trading |
| title_auth | Banking and trading |
| title_exact_search | Banking and trading |
| title_full | Banking and trading prepared by Arnoud W.A. Boot and Lev Ratnovski |
| title_fullStr | Banking and trading prepared by Arnoud W.A. Boot and Lev Ratnovski |
| title_full_unstemmed | Banking and trading prepared by Arnoud W.A. Boot and Lev Ratnovski |
| title_short | Banking and trading |
| title_sort | banking and trading |
| topic | Banks and banking fast Commerce fast BUSINESS & ECONOMICS / Finance bisacsh Bank Wirtschaft Banks and banking Commerce |
| topic_facet | Banks and banking Commerce BUSINESS & ECONOMICS / Finance Bank Wirtschaft |
| work_keys_str_mv | AT bootarnoudwa bankingandtrading AT ratnovskilev bankingandtrading AT internationalmonetaryfundxxbresearchdepartment bankingandtrading |