Since, the publication of the first edition of the Oxford Handbook of Banking in 2010, banking systems around the world have continued to be affected by the recent financial crisis which began in 2007. There have been wide-ranging regulatory reforms aimed at containing their risk-taking capabilities. Regulatory reform has been most marked in the US with the passing of the landmark Dodd–Frank Act of 2010, which aims to eliminate too-big-to-fail and the implicit taxpayer bailouts of major banks. The Act also seeks to reduce the risk-taking capacity of banks by limiting proprietary trading and other volatile business areas, embodied in the Volcker Rule. Similar major reforms are ongoing throughout the European Union following the Liikanen Report of 2012 and the Vickers Report of 2011, both of which aim to segregate or ring-fence banks’ risky securities activities from less volatile retail banking operations. Coupled with this is the desire to bolster regulatory oversight as well as to force institutions to hold more capital and liquidity. The latter two are encapsulated by the Basel III reforms that national legislators are expected to put fully into place by 2019.
In addition to the turmoil associated with the recent financial crisis, Europe has also experienced a sovereign debt crisis, where weak banking systems and excessive government indebtedness have led to sovereign bailouts of Greece, Ireland, Spain, and Portugal (the so-called euro periphery countries). This has had implications for the credibility of the European single currency and policy conducted by the European Central Bank. It has also led to the recognition that bank and sovereign risks are inextricably linked.
The second edition is substantially updated and changed from the first edition, with at least 40% new material, reflecting the unprecedented changes that have occurred in global banking systems. This new edition provides the reader with a timely and comprehensive overview and analysis of many of these developments. The authors of the following 40 chapters comprise a collection of leading academics and policymakers in the field. These authors emanate from universities in North America, Europe, South America, and Asia; the US Federal Reserve System; the Office of the Comptroller of Currency; the Central Bank of Ireland, the European Central Bank; the World Bank; and the International Monetary Fund. The book strikes a balance among abstract theory, empirical research, practitioner analysis, and policy-related material. Chapters in the handbook have different emphases on these four ingredients. We hope that the contributions contained here set the stage for future research and policy debate for many years to come.
The Oxford Handbook of Banking (2nd edn)
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