LEADER 07637oam 22016814 450 001 9910961232603321 005 20250426110506.0 010 $a9781475512489 010 $a1475512481 010 $a9781475512465 010 $a1475512465 035 $a(CKB)2670000000278930 035 $a(EBL)1607012 035 $a(SSID)ssj0000941793 035 $a(PQKBManifestationID)11498813 035 $a(PQKBTitleCode)TC0000941793 035 $a(PQKBWorkID)10971664 035 $a(PQKB)11650760 035 $a(Au-PeEL)EBL1607012 035 $a(CaPaEBR)ebr10627151 035 $a(OCoLC)812041171 035 $a(IMF)WPIEE2012238 035 $a(IMF)WPIEA2012238 035 $a(MiAaPQ)EBC1607012 035 $aWPIEA2012238 035 $a(EXLCZ)992670000000278930 100 $a20020129d2012 uf 0 101 0 $aeng 135 $aurcn||||||||| 181 $ctxt 182 $cc 183 $acr 200 10$aBanking and Trading /$fArnoud Boot, Lev Ratnovski 205 $a1st ed. 210 1$aWashington, D.C. :$cInternational Monetary Fund,$d2012. 215 $a1 online resource (49 p.) 225 1 $aIMF Working Papers 225 0$aIMF working paper ;$vWP/12/238 300 $aDescription based upon print version of record. 311 08$a9781475512472 311 08$a1475512473 311 08$a9781475511215 311 08$a1475511213 320 $aIncludes bibliographical references. 327 $aCover; Contents; I. Introduction; II. Relationship to the Literature; III. Model; A. Approach; B. Credit Constraints; C. Banking; D. Trading; IV. Benefits of Conglomeration; V. Time Inconsistency of Capital Allocation; A. Setup: Long-term Banking; B. The Consequences of Time Inconsistency; C. Cost of Conglomeration under Time Inconsistency; VI. Trading as Risk-Shifting; A. Setup: Risky Trading; B. Risk-Shifting; C. The Interaction of Time Inconsistency and Risk Shifting; VII. Discussion; A. Front-loaded Income in Relationship Banking; B. External Equity and Internal Capital Allocation 327 $aC. Policy Implications VIII. Conclusion; References; Figures; 1. The Timeline; 2. The Timeline with Time Inconsistency; 3. Relationship Banking Allocation R as a Function of Trading Opportunities; 4. The Volume of Banking (R) and Trading (T), and Profits (?)under Conglomerated Banking; 5. The Volumes of Banking (R)and Trading (T), and Profits (?) with Risk-shifting; 6. Time Inconsistency Arises due to a Higher Return to Trading under Risk-shifting ("Effect 1"); 7. Risk-shifting Arises due to a Higher Volume of Trading, Driven by Time Inconsistency ("Effect 2") 330 3 $aWe study the effects of a bank's engagement in trading. Traditional banking is relationship-based: not scalable, long-term oriented, with high implicit capital, and low risk (thanks to the law of large numbers). Trading is transactions-based: scalable, shortterm, capital constrained, and with the ability to generate risk from concentrated positions. When a bank engages in trading, it can use its ?spare? capital to profitablity expand the scale of trading. However, there are two inefficiencies. A bank may allocate too much capital to trading ex-post, compromising the incentives to build relationships ex-ante. And a bank may use trading for risk-shifting. Financial development augments the scalability of trading, which initially benefits conglomeration, but beyond some point inefficiencies dominate. The deepending of the financial markets in recent decades leads trading in banks to become increasingly risky, so that problems in managing and regulating trading in banks will persist for the foreseeable future. The analysis has implications for capital regulation, subsidiarization, and scope and scale restrictions in banking. 410 0$aIMF Working Papers; Working Paper ;$vNo. 2012/238 606 $aBanks and banking 606 $aStocks 606 $aBank soundness$2imf 606 $aBanking$2imf 606 $aBanks and Banking$2imf 606 $aBanks and banking$2imf 606 $aBanks$2imf 606 $aBrokerage$2imf 606 $aCapital and Ownership Structure$2imf 606 $aCredit$2imf 606 $aDepository Institutions$2imf 606 $aEconomic & financial crises & disasters$2imf 606 $aFinance$2imf 606 $aFinance: General$2imf 606 $aFinancial Crises$2imf 606 $aFinancial crises$2imf 606 $aFinancial Institutions and Services: Government Policy and Regulation$2imf 606 $aFinancial institutions$2imf 606 $aFinancial Risk and Risk Management$2imf 606 $aFinancial Risk Management$2imf 606 $aFinancial risk management$2imf 606 $aFinancial sector policy and analysis$2imf 606 $aFinancing Policy$2imf 606 $aGeneral Financial Markets: Government Policy and Regulation$2imf 606 $aGoodwill$2imf 606 $aIndustries: Financial Services$2imf 606 $aInvestment Banking$2imf 606 $aLines of credit$2imf 606 $aLoans$2imf 606 $aMicro Finance Institutions$2imf 606 $aMonetary economics$2imf 606 $aMonetary Policy, Central Banking, and the Supply of Money and Credit: General$2imf 606 $aMoney and Monetary Policy$2imf 606 $aMoney$2imf 606 $aMoral hazard$2imf 606 $aMortgages$2imf 606 $aPublic finance & taxation$2imf 606 $aRatings and Ratings Agencies$2imf 606 $aTax incentives$2imf 606 $aTaxation$2imf 606 $aTaxation, Subsidies, and Revenue: General$2imf 606 $aValue of Firms$2imf 606 $aVenture Capital$2imf 607 $aUnited States$2imf 615 0$aBanks and banking. 615 0$aStocks. 615 7$aBank soundness 615 7$aBanking 615 7$aBanks and Banking 615 7$aBanks and banking 615 7$aBanks 615 7$aBrokerage 615 7$aCapital and Ownership Structure 615 7$aCredit 615 7$aDepository Institutions 615 7$aEconomic & financial crises & disasters 615 7$aFinance 615 7$aFinance: General 615 7$aFinancial Crises 615 7$aFinancial crises 615 7$aFinancial Institutions and Services: Government Policy and Regulation 615 7$aFinancial institutions 615 7$aFinancial Risk and Risk Management 615 7$aFinancial Risk Management 615 7$aFinancial risk management 615 7$aFinancial sector policy and analysis 615 7$aFinancing Policy 615 7$aGeneral Financial Markets: Government Policy and Regulation 615 7$aGoodwill 615 7$aIndustries: Financial Services 615 7$aInvestment Banking 615 7$aLines of credit 615 7$aLoans 615 7$aMicro Finance Institutions 615 7$aMonetary economics 615 7$aMonetary Policy, Central Banking, and the Supply of Money and Credit: General 615 7$aMoney and Monetary Policy 615 7$aMoney 615 7$aMoral hazard 615 7$aMortgages 615 7$aPublic finance & taxation 615 7$aRatings and Ratings Agencies 615 7$aTax incentives 615 7$aTaxation 615 7$aTaxation, Subsidies, and Revenue: General 615 7$aValue of Firms 615 7$aVenture Capital 676 $a332.1/52 700 $aBoot$b Arnoud$01815924 701 $aRatnovski$b Lev$01193852 801 0$bDcWaIMF 906 $aBOOK 912 $a9910961232603321 996 $aBanking and Trading$94371548 997 $aUNINA