Category Archives: markets

Bank Lending and Non-bank Lending

Posted on May 13, 2017 by Arnold Kling

Daniel Nevins, in Economics for Independent Thinkers, a book I mentioned the other day, thinks of non-bank lending as coming from savings and bank lending as created by fiat. I do not think in those terms. Think of an economy … Continue reading →

Posted in books and book reviews, financial markets, PSST and Macro | 7 Comments

Why pick on big banks?

Posted on May 5, 2017 by Arnold Kling

A reader writes, I would describe the posture of big banks (and other well-heeled financial institutions) as “pleading for mercy,” more than “buying friends and influence.” Banks are giant piles of treasure and if in the olden times they would … Continue reading →

Posted in financial markets | 5 Comments

Perhaps we need peer regulation in finance

Posted on May 1, 2017 by Arnold Kling

Guy Rolnik writes, After acknowledging that the OCC knew of the issues within Wells Fargo as far back as 2010, it stated that “The OCC did not take timely and effective supervisory actions after the bank and the OCC identified … Continue reading →

Posted in financial markets, Mark Thoma is Indispensable | 1 Comment

Should Wal-Mart be allowed into banking?

Posted on April 29, 2017 by Arnold Kling

Ronald J. Mann wrote, Wal-Mart’s application to form a bank ignited controversy among disparate groups, ranging from union backers to realtor’s groups to charitable organizations. The dominant voice, though, was that of independent bankers complaining that the big-box retailer would … Continue reading →

Posted in financial markets | 5 Comments

Remarks on the Canadian banking system

Posted on April 28, 2017 by Arnold Kling

A commenter writes, Before the depression, the US heavily regulated banks and restricted the founding of branches; there lots of small banks tethered to local markets. In contrast, Canadian banks didn’t face such stringent regulations and were larger and more … Continue reading →

Posted in financial markets | 12 Comments

Financial Policy if I were in charge

Posted on April 24, 2017 by Arnold Kling

This afternoon, I am supposed to participate in a discussion of financial regulatory policy. There are so many participants, including big shots like John Taylor and John Cochrane, that I may end up not saying anything. I probably will just … Continue reading →

Posted in Financial Crises, financial markets, Housing and housing finance | 32 Comments

Banking vs. Transparency

Posted on March 31, 2017 by Arnold Kling

Tri Vi Dang, Gary Gorton, Bengt Holmstrom. and Guillermo Ordonez write, banks produce private money because they can keep the information that they produce about backing assets secret. By being opaque, banks can produce bank money more efficiently. Opacity makes … Continue reading →

Posted in financial markets | Comments Off

Empirical Public Policy

Posted on March 17, 2017 by Arnold Kling

James R. Barth and Stephen Matteo Miller write, Testing whether it is good policy to increase bank capital requirements from 4 percent to 15 percent requires calculating and comparing the benefits and costs of such a change. Across all tested … Continue reading →

Posted in financial markets, public choice | 6 Comments

Finance: Practitioners vs. Economists

Posted on February 7, 2017 by Arnold Kling

Pablo Fernandez writes, If all investors had identical expectations, A) Trading volume in financial markets would be very small. However, the trading volumes of many markets are huge. B) All valuations of the shares of a company should coincide. However, … Continue reading →

Posted in Economic education and methods, financial markets | 2 Comments

Reframing Financial Regulation

Posted on January 10, 2017 by Arnold Kling

That is a new compendium from Mercatus. I wrote one of the essays, on risk-based capital. The way I see it, the main purpose of central banking and financial regulation is to try to allocate credit to uses favored by … Continue reading →

Posted in books and book reviews, financial markets, links to my essays | 8 Comments