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Traditional bank competition policy seeks to balance efficiency with incentives to take risk. The main tools are rules guiding entry/exit and consolidation of banks. This paper seeks to refine this view in light of recent changes to financial services provision. Modern banking is largely market-based and contestable. Consequently, banks in advanced economies today have structurally low charter values and high incentives to take risk. In such an environment, traditional policies that seek to affect the degree of competition by focusing on market structure (i.e. concentration) may have limited effect. We argue that bank competition policy should be reoriented to deal with the too-big-to-fail (TBTF) problem. It should also focus on the permissible scope of activities rather than on market structure of banks. And following a crisis, competition policy should facilitate resolution by temporarily allowing higher concentration and government control of banks.

Banks and banking. --- Competition. --- Competition --- Competition (Economics) --- Competitiveness (Economics) --- Economic competition --- Commerce --- Conglomerate corporations --- Covenants not to compete --- Industrial concentration --- Monopolies --- Open price system --- Supply and demand --- Trusts, Industrial --- Agricultural banks --- Banking --- Banking industry --- Commercial banks --- Depository institutions --- Finance --- Financial institutions --- Money --- Economic aspects --- Banks and Banking --- Finance: General --- Financial Risk Management --- Taxation --- Financial Institutions and Services: General --- Investment Banking --- Venture Capital --- Brokerage --- Ratings and Ratings Agencies --- Financial Institutions and Services: Government Policy and Regulation --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- General Financial Markets: General (includes Measurement and Data) --- Financial Crises --- Crisis Management --- Taxation, Subsidies, and Revenue: General --- General Financial Markets: Government Policy and Regulation --- Economic & financial crises & disasters --- Public finance & taxation --- Financial crises --- Crisis management --- Tax incentives --- Financial markets --- Bank soundness --- Financial sector policy and analysis --- Banks and banking --- Germany

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While public financial institutions (such as public development banks) are commonly associated with developing countries, in fact they are prevalent in the developed world as well. We study a sample of public financial institutions in industrialized countries and identify dominant trends in their organization and oversight. While practices in developed countries may be a useful reference point, a more nuanced approach, accounting for the disparity of institutional environment, regulatory capacity, and government accountability and effectiveness, may be required in developing countries. Further investment in the accumulation of evidence and formulation of best practices in the organization and oversight of public financial institutions seems warranted and necessary. This paper was prepared while Mr. Ratnovski was working in the Financial Supervision and Regulation Division during January-April 2006. The authors are grateful to Jonathan Fiechter, David Marston, and participants of an MCM seminar in April 2006 for their helpful comments.

Finance: General --- Infrastructure --- Money and Monetary Policy --- Industries: Financial Services --- Business and Financial --- Financial Institutions and Services: Government Policy and Regulation --- Economic Development: Urban, Rural, Regional, and Transportation Analysis --- Housing --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- General Financial Markets: Government Policy and Regulation --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Finance --- Macroeconomics --- Monetary economics --- Financial services law & regulation --- Financial services --- Credit --- Financial regulation and supervision --- Financial instruments --- Financial services industry --- Saving and investment --- Law and legislation --- Japan

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There is much confusion about what shadow banking is. Some equate it with securitization, others with non-traditional bank activities, and yet others with non-bank lending. Regardless, most think of shadow banking as activities that can create systemic risk. This paper proposes to describe shadow banking as “all financial activities, except traditional banking, which require a private or public backstop to operate”. Backstops can come in the form of franchise value of a bank or insurance company, or in the form of a government guarantee. The need for a backstop is in our view a crucial feature of shadow banking, which distinguishes it from the “usual” intermediated capital market activities, such as custodians, hedge funds, leasing companies, etc.

Banks and banking. --- Capital market. --- Financial services industry. --- Services, Financial --- Service industries --- Capital markets --- Market, Capital --- Finance --- Financial institutions --- Loans --- Money market --- Securities --- Crowding out (Economics) --- Efficient market theory --- Agricultural banks --- Banking --- Banking industry --- Commercial banks --- Depository institutions --- Money --- Banks and Banking --- Budgeting --- Finance: General --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Financial Institutions and Services: Government Policy and Regulation --- Debt --- Debt Management --- Sovereign Debt --- General Financial Markets: Government Policy and Regulation --- General Financial Markets: General (includes Measurement and Data) --- Portfolio Choice --- Investment Decisions --- Budgeting & financial management --- Shadow banking --- Government liabilities --- Systemic risk --- Financial services --- Public financial management (PFM) --- Financial sector policy and analysis --- Financial markets --- Liquidity --- Asset and liability management --- Nonbank financial institutions --- Law and legislation --- Banks and banking --- Budget --- Financial risk management --- Capital market --- Economics --- United States

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We contrast how monetary policy affects intangible relative to tangible investment. We document that the stock prices of firms with more intangible assets react less to monetary policy shocks, as identified from Fed Funds futures movements around FOMC announcements. Consistent with the stock price results, instrumental variable local projections confirm that the total investment in firms with more intangible assets responds less to monetary policy, and that intangible investment responds less to monetary policy compared to tangible investment. We identify two mechanisms behind these results. First, firms with intangible assets use less collateral, and therefore respond less to the credit channel of monetary policy. Second, intangible assets have higher depreciation rates, so interest rate changes affect their user cost of capital relatively less.

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We jointly estimate credit and fiscal multipliers in China. We use the tenure of the provincial party secretary, interacted with the type of stimulus used in other provinces, to obtain separate instruments for provincial credit and government expenditure. We estimate a fiscal multiplier of 0.8 and a credit multiplier of 0.2 in 2001-2015. The multipliers have changed over time. The fiscal multiplier has increased from 0.75 in 2001-2008 to 1.4 in 2010-2015. The credit multiplier has declined from 0.17 to zero over the same periods. Our results suggest that reducing credit growth in China is unlikely to disrupt output growth, whereas fiscal policy may be effective in supporting macroeconomic adjustment.

Credit --- Fiscal policy --- Econometric models --- China --- Economic conditions --- Econometric models. --- E-books --- Tax policy --- Taxation --- Economic policy --- Finance, Public --- Government policy --- Cina --- Kinë --- Cathay --- Chinese National Government --- Chung-kuo kuo min cheng fu --- Republic of China (1912-1949) --- Kuo min cheng fu (China : 1912-1949) --- Chung-hua min kuo (1912-1949) --- Kina (China) --- National Government (1912-1949) --- China (Republic : 1912-1949) --- People's Republic of China --- Chinese People's Republic --- Chung-hua jen min kung ho kuo --- Central People's Government of Communist China --- Chung yang jen min cheng fu --- Chung-hua chung yang jen min kung ho kuo --- Central Government of the People's Republic of China --- Zhonghua Renmin Gongheguo --- Zhong hua ren min gong he guo --- Kitaĭskai︠a︡ Narodnai︠a︡ Respublika --- Činská lidová republika --- RRT --- Republik Rakjat Tiongkok --- KNR --- Kytaĭsʹka Narodna Respublika --- Jumhūriyat al-Ṣīn al-Shaʻbīyah --- RRC --- Kitaĭ --- Kínai Népköztársaság --- Chūka Jinmin Kyōwakoku --- Erets Sin --- Sin --- Sāthāranarat Prachāchon Čhīn --- P.R. China --- PR China --- PRC --- P.R.C. --- Chung-kuo --- Zhongguo --- Zhonghuaminguo (1912-1949) --- Zhong guo --- Chine --- République Populaire de Chine --- República Popular China --- Catay --- VR China --- VRChina --- 中國 --- 中国 --- 中华人民共和国 --- Jhongguó --- Bu̇gu̇de Nayiramdaxu Dundadu Arad Ulus --- Bu̇gu̇de Nayiramdaqu Dumdadu Arad Ulus --- Bu̇gd Naĭramdakh Dundad Ard Uls --- BNKhAU --- БНХАУ --- Khi︠a︡tad --- Kitad --- Dumdadu Ulus --- Dumdad Uls --- Думдад Улс --- Kitajska --- China (Republic : 1949- ) --- Macroeconomics --- Money and Monetary Policy --- Public Finance --- Comparative or Joint Analysis of Fiscal and Monetary Policy --- Stabilization --- Treasury Policy --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Taxation, Subsidies, and Revenue: General --- Size and Spatial Distributions of Regional Economic Activity --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Fiscal Policy --- National Government Expenditures and Related Policies: General --- Monetary economics --- Public finance & taxation --- Fiscal multipliers --- Fiscal stimulus --- Expenditure --- Bank credit --- Money --- Expenditures, Public --- China, People's Republic of