Systemic Risk and Financial Regulation
Over the last 20 years, there have been significant concerns about the stability of financial systems, underlined by the East-Asian financial crisis, the Russian financial crisis, the Brazilian financial crisis, the United States financial crisis, etc. Systemic risk has been widely accepted as the fundamental underlying concept for the study of financial instability. In July 2010, the U.S. Congress enacted the Dodd Frank Wall Street Reform and Consumer Protection Act. The Dodd Frank Act created the Financial Stability Oversight Council (FSOC) and Office of Financial Research (OFR). Nowadays systemic financial risk is widely regarded as the important content of the financial system stability study.
The seminar will firstly introduce a literature review of systemic risk from three different angles. The first perspective is “contagion”, a particularly strong propagation of failures from one institution, market or system to another. The second one is “leverage”, generally referred as any technique involving the use of borrowed funds in the purchase of an asset to make profit. Many researchers find the existence of procyclicality of leveraging effect through the recent boom and crisis. The third perspective is “losses”, which describes the potential losses if a systemic event occurs. In the following, the seminar will mainly focus on systemic risk of the practices of different countries, and discuss the root of potential systemic risk in China.
Chenjie Shao is PhD candidate, department of financial engineering, school of systems & enterprises, Stevens Institute of Technology. Her research interests is financial engineering and systemic risk, macroeconomics and macroprudential policy, etc. url: https://www.linkedin.com/in/shao-chenjie-8505a321
Shao, Chenjie & Khashanah, Khaldoun (2015), “The Macroeconomic Effects of Bank Affiliated Mortgage Companies on the Business Cycle”, the 2016 China Economist Society North America Annual Conference in Sarcremento, CA, US. Shao, Chenjie & Khashanah, Khaldoun (2016), “Monetary and Macroprudential Policy Rules in a DSGE Model with Bank Affiliated Mortgage Companies”, the 2017 Scottish Economic Society Annual Conference in Perth, Scotland, U.K..
Shao, Chenjie & Khashanah, Khaldoun (2017), “The Originate-to-Distribute Model and Macroprudential Policy”, the 2017 Canadian Economic Association Annual Conference in Antigonish, Nova Scotia, Canada.
Yang, Hanchao; Khashanah, Khaldoun; Shao, Chenjie & Liu, Yan (2016), “Multi-Scale Economic Dynamics: The Micro-Macro Wealth Dynamics and the Two-Level Imbalances of the Euro Crisis”, Computational Economics (submitted).