Regulation of Banks and Risk Management:
Pre- and Post-Crisis
Instructor: Robert DeYoung
The banking system is an essential—but unpredictably fragile—foundation for our market economies. To prevent this foundation from collapsing, we regulate banks more extensively than any other market sector. But our regulatory efforts have too often been unsuccessful. In this course, we examine the good and bad performance record of bank regulation and analyze the challenges facing bank regulation in the post-crisis world.
The class has three parts. We begin with a brief history of banking and bank regulation. The focus is on the genesis of the main facets of bank regulation: bank examination, deposit insurance, capital and liquidity requirements, competition policy, and the bank safety net. Next, we look at the modern (but pre-crisis) era, a period of adjustment and experimentation. Bank regulations were repeatedly tightened and loosened—in response to banking crises but also to address issues of social fairness—and regulation became international in scope. The final and largest part of the class concerns bank regulation during and after the global financial crisis. We ask two main questions: How did regulation contribute to the crisis? Will the ongoing re-regulation of the banking system solve the underlying problems?
The main issues and arguments will be based on bank regulations from both the U.S. and Europe. Academic and government research studies will be presented to provide evidence in favor of, or opposed to, these regulations.
Dr. Robert (Bob) DeYoung is the Capitol Federal Distinguished Professor in Financial Markets and Institutions at the University of Kansas School of Business. He is also co-editor of the Journal of Money, Credit and Banking; a research program coordinator at the FDIC’s Center for Financial Research; and an adjunct member of the economics faculty at the University of Limoges. Prior to joining the finance faculty at Kansas, Bob was an associate director of research at the FDIC (2005-2007); an economic advisor at the Federal Reserve Bank of Chicago (1998-2005); a senior financial economist at the Office of the Comptroller of the Currency in the United States Treasury Department (1992-1998); and a Joyce Foundation Teaching Fellow at Beloit College (1988-1992). He is currently president of the Southern Finance Association, and he is past editor of the Journal of Financial Services Research. Bob has written extensively on the performance of financial institutions, markets, and public policy in leading academic journals, in regulatory publications, and in the financial press. He holds a bachelors degree from Rutgers University-Camden and a doctoral degree in economics from the University of Wisconsin-Madison.
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