Towards a Better Understanding of the Capitalization of Banks
In the ongoing focus of the Amsterdam Center for Corporate Finance (ACCF) on the future structure of the financial sector, this issue of its series Topics in Corporate Finance is devoted to the subject of capitalization of banks with as leading author Professor Anat Admati, the George G.C. Parker Professor of Finance and Economics at Stanford University who has been at the forefront of the bank capitalization discussion.
Over five years ago governments saw themselves forced to step in the oversized and over-risked ´too-big-to-fail´-financial sector and bailed it out at great cost. Even today the consequences of the financial crisis are still being felt. It is therefore that Anat R. Admati is calling for a much more stable and hence less vulnerable and costly banking system as it is better to prevent than to cure.
Over five years ago governments saw themselves forced to step in the oversized and over-risked ´too-big-to-fail´-financial sector and bailed it out at great cost. Even today the consequences of the financial crisis are still being felt. It is therefore that Anat R. Admati is calling for a much more stable and hence less vulnerable and costly banking system as it is better to prevent than to cure.
With the current issue of the Topics in Corporate Finance we seek to contribute to a better understanding of the ways in which the financial sector interrelates with the society at large, i.e. the ´real´ economy. Two papers are included in this issue. One is by Admati (together with Peter M. DeMarzo, Martin F. Hellwig and Paul C. Pfleiderer) on capital regulation and the role of equity. The other is by Sweder van Wijnbergen and Arnoud Boot who for the Dutch policy debate have put together those ideas on capitalization and banking. How the future will unfold is unclear and the heated debates on the future of the financial sector will undoubtedly continue for the years to come. This issue of Topics in Corporate Finance seeks to contribute to the discussion.