Afterword: The Post-crisis Regulatory Regime and Bank Business Models
David T Llewellyn
Foreword
Introduction
Risk Assessment in the EU
The Single EU Supervisory Reporting
The EU Harmonised Definition of Non-performing Exposures: Origins, Main Features and Possible Improvements
Towards Consistent and Effective Risk Indicators
Data Workflow: From Quality Checking to Risk Dashboards
EU-wide Stress Tests: Rationale and Basics
EU-Wide Stress Test: Methodology
Macrofinancial Scenarios for System-wide Stress Tests: Process and Challenges
Benchmarking of Credit Risk Models For Determining Own Funds Requirements
Benchmarking of Market Risk Models For Determining Own Funds Requirements
The Analysis of Funding Plans
Transparency and Market Discipline
Afterword: The Post-crisis Regulatory Regime and Bank Business Models
Following the detailed aspects of regulation and supervision covered in this book, this concluding chapter will focus on a more general perspective about how the regulatory regime has changed fundamentally since the crisis, and the possible implications for bank business models. As there is a symbiotic relationship between regulation and bank business models (both reacting to each other), all of the topics considered in earlier chapters (risk analysis, stress testing, funding plans of banks, capital requirements, internal modelling, etc) are substantially affected by regulation. The context is that the few years since the onset of the crisis have seen one of the biggest-ever sets of changes to the global regulatory regime. Regulation has inevitably responded to the weaknesses in some aspects of banks’ business models that were revealed in the crisis, and which in turn reflected several structural changes in the global financial system in the decade prior to the onset of the crisis.
Our starting point is that the evolution of business models does not occur in a vacuum: their antecedents need to be considered. Several structural changes in the global financial system set the
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