Jonathan Acosta-Smith, Benjamin Guin, Mauricio Salgado-Moreno and Quynh-Anh Vo Over the past years, a growing consensus has acknowledged the need to construct a ‘system [wherein] every financial decision takes climate change into account‘. While such a system is still far from reality, market participants already produce and demand an increasing amount of climate-related information. Equally, … Continue reading Understanding climate-related disclosures of UK financial institutions
Microprudential Regulation
Mahmoud Fatouh Small banks tend to have more specialised business models, likely focusing on commercial and retail banking activities, and show limited interconnectedness to other financial institutions. Hence, they are likely to show less intense cyclical patterns compared to large banks. This post investigates whether large and small banks in the UK and US differ … Continue reading The pro-cyclicality of capital ratios and credit supply, a tale of two sizes
John Hillier, Tom Perkins, Ryan Li, Hannah Bloomfield, Josie Lau, Stefan Claus, Paul Harrington, Shane Latchman and David Humphry In 2022 a sequence of storms (Dudley, Eunice and Franklin) inflicted a variety of hazards on the UK and across Northwest Europe, resulting in £2.5–4.2 billion in insured losses. They dramatically illustrate the potential risk of … Continue reading What if it’s a perfect storm? Stronger evidence that insurers should account for co-occurring weather hazards
Qun Harris, Ieva Sakalauskaite and Misa Tanaka After the 2007–08 Global Financial Crisis (GFC), several jurisdictions introduced remuneration regulations for banks with the aim of discouraging excessive risk-taking and short-termism. One such regulation is the bonus cap rule which was first introduced in the European Union (EU) and the United Kingdom (UK) in 2014. This … Continue reading Does the bonus cap work?
Ieva Sakalauskaite and Qun Harris Following the Global Financial Crisis of 2007–08, some regulators introduced rules on bankers’ bonuses with an aim to mitigate incentives to take excessive risks, and in turn promote financial stability. In a recent paper we use detailed data on remuneration of staff in six large UK banks to look at … Continue reading How does remuneration regulation affect bankers’ pay?
David Swallow and Chris Faint Policymakers have been investing heavily, to an accelerated timeline, to better understand the financial risks from climate change and to ensure that the financial system is resilient to those risks. Against that background, some commentators have observed that the most carbon-intensive sectors may be subject to the greatest increase in … Continue reading Capitalising climate risks: what are we weighting for?