Contents -- Preface -- Acknowledgments -- Part I. Keynote Addresses -- Chapter 1. A Ferment of Regulatory Proposals Charles A. E. Goodhart -- A Simpler Approach? -- How to Get from Here to There -- A More Structural Approach -- Chapter 2. Progress and Priorities for Financial Reform Mary John Miller -- Introduction -- A Stronger Financial System: Public and Private Reforms -- Looking Ahead -- Why It Matters -- Part II. Description and Measurement of the Financial System -- Chapter 3. What Is Meaningful Banking Reform,Why Is It So Necessary…and So Unlikely? Charles W. Calomiris -- The Problem -- How and Why Regulatory Discipline Fails -- Some Specific Ideas -- References -- Chapter 4. The Great Leveraging Alan M. Taylor -- Fact 1. Crises: Almost Forgotten, Now They're Back -- Fact 2. Consequences: Crises are Depressing and Deflationary -- Fact 3. Extreme Leverage: Size of the Banking Sector Is Unprecedented -- Fact 4. Global Asymmetry: EMs Buy Insurance, DMs Sell It -- Fact 5. Savings Glut: Short-Run Panic versus Long-Run Demography -- Summing Up the Facts:What Is Happening? -- Lesson 1: Past Private Credit Growth Does Contain Valuable Predictive Information About Likelihood of a Crisis -- Lesson 2: As Symptoms of Financial Crises, External Imbalances Are a Distraction, and so Are Public Debts -- Lesson 3: After a Credit Boom, Expect a More Painful "Normal Recession" as Well as a More Painful "Financial Crisis Recession" -- Lesson 4: In a Financial Crisis with Large Run-Up in Private Sector Credit, Mark Down Growth/Inflation More -- Lesson 5: In a Financial Crisis with Large Public Debt, and Large Run-up in Private Sector Credit Mark Down your Forecast Even More -- Summing Up:What Next for Macroeconomics and Policy? -- References.

Chapter 5. Finance and Economic Development in a Model with Credit Rationing Jean-Louis Arcand, Enrico Berkes, and Ugo Panizza -- Introduction -- The Economics 101 Model -- The Credit Rationing Model -- Social Planner -- Decentralized Equilibrium -- Conclusions -- References -- Appendix A -- Chapter 6. Too Much Finance, Too Much Credit? Comments on Papers by Calomiris, Arcand-Berkes-Panizza, and Taylor Eugene N. White -- References -- Part III. Social Benefits and Costs of the Current Financial System -- Chapter 7. Bank Regulatory Reforms and Racial Wage Discrimination Ross Levine, Alexey Levkov, and Yona Rubinstein -- Introduction -- Bank Deregulation and Competition in Nonfinancial Industries -- Blacks' Relative Wages and the Racial Bias Index -- Results -- Prerequisites -- The Impact of Deregulation on Blacks' Relative Wages -- Extensions -- Conclusions -- References -- Chapter 8. Finance: Economic Lifeblood or Toxin? Marco Pagano -- Introduction -- A Mixed Record: The Literature -- The Bright Side -- The Dark Side -- Shadow banks and securitization -- Low Interest Rates and the Fall in Credit Standards -- Systemic bailouts, excessive lending, and systemic risk -- The Nonlinear Effect of Financial Development: Some Evidence -- Nonlinear Effect on Long-Run Growth -- Nonlinear Effects on Bank Solvency and Systemic Stability -- Why Didn't Regulation Prevent Financial Hypertrophy? -- "Sins of Omission:" Neglecting Financial Innovation and Changing Incentives -- "Sins of Commission:" The Role of Politics -- References -- Chapter 9. Finance: Is Bigger Badder? Gerard Caprio, Jr. -- References -- Part IV. Financial Industry Innovation -- Chapter 10. A Proposal for the Resolution of Systemically Important Assets and Liabilities: The Case of the Repo Market Viral V. Acharya and T. Sabri Öncü -- Introduction.

The Dodd-Frank ResolutionMechanism for Nonbank SIFIs -- The US Repo Market -- Evolution of the US Repo Market -- Repo Market and the Crisis of 2007-2009 -- A Case for Reforming the Repo Market -- Proposal for a Repo Resolution Authority -- A Historical Precedent: The Glass Proposal -- Concluding Remarks -- References -- Chapter 11. Reexamining Financial Innovation after the Global Financial Crisis W. Scott Frame and Lawrence J. White -- Introduction -- Background1 -- Three Usual Suspects -- Credit Default Swaps -- Structured Investment Vehicles -- Securitization -- Conclusions -- References -- Chapter 12. Financial Innovation and Shadow Banking Luc Laeven -- References -- Part V. Effects of Regulation, the Safety Net and Other Government Guarantees -- Chapter 13. Evolving Intermediation Nicola Cetorelli -- From Bank-Based to Securitization-Based Intermediation -- A Role-Based Approach to Understanding Bank Evolution -- Organizational Adaptation: An Entity-Based View -- Results -- Summary and Normative Suggestions -- References -- Chapter 14. The Socially Optimal Level of Capital Requirements: A View from Two Papers Javier Suarez -- Introduction -- The Procyclical Effects of Bank Capital Regulation -- A MacroeconomicModel of Endogenous Systemic Risk-Taking -- Conclusions -- References -- Chapter 15. Effects of Regulation, the Safety Net, and Other Government Guarantees Mathias Dewatripont -- References -- Part VI. Finance and Economic Activity: Variations across Emerging and Developed Markets -- Chapter 16. Legal and Alternative Institutions in Finance and Commerce Franklin Allen and Jun "QJ" Qian -- Introduction -- Examples of Alternative Mechanisms and Problems with the Legal System -- Alternative Mechanisms in China and India -- Alternative Mechanisms Can Work in Complicated Transactions -- Intellectual Property Rights and Innovations.

Limited Capacity of the Legislature -- Legal Institutions versus Alternative Mechanisms: Comparisons and Policy Implications -- Concluding Remarks -- References -- Chapter 17. Finance in the Tropics: Understanding Structural Gaps and Policy Challenges Thorsten Beck -- Introduction -- The Financial Possibility Frontier -- Taxonomy of Financial Sector Challenges -- The Role of Competition in Financial Deepening -- The Role of Financial Innovation -- Globalization -- What Role for Government? -- Beyond Policies-All Financial Sector Policy is Local -- References -- Chapter 18. Foreign Banks: Access to Finance and Financial Stability Neeltje van Horen -- Introduction -- Foreign bank presence -- Impact of Foreign Banks on Domestic Credit -- Foreign Banks and Financial Stability -- Final Remarks -- References -- Chapter 19. Institutions, Finance, and Economic Activity: Views and Agenda Elias Papaioannou -- Introduction -- Summary -- Structure -- Legal Institutions, Finance, and Development -- Finance and Economic Performance -- Law and Finance -- The Issues -- Econometric Considerations-Identification -- Theoretical-Channels -- Future Research: Understanding Heterogeneity and the Role of Other-than-Law Factors -- Concluding Remarks -- References -- Part VII. Break Up the Big Banks? -- Chapter 20. Breaking (Banks) Up Is Hard to Do: New Perspective on Too Big to Fail James R. Barth and Apanard (Penny) Prabha -- Just How Big are the World's Biggest Banks? -- What Is a Bank? -- What Should Be Done to Resolve the Too-Big-to-Fail Problem? -- Summary and Conclusion -- References -- Chapter 21. Restructuring the Banking System to Improve Safety and Soundness Thomas M. Hoenig and Charles S. Morris -- Executive Summary -- Proposal -- Why Restricting Activities Is the Solution -- Evolution of Current Financial Structure -- Regulation -- Increased Competition.

Shadow Banking -- Expansion of Bank Activities -- Implications for Financial Structure, Stability, and Risk -- Changes in Financial Structure and Stability -- New Activities Make It More Difficult to Manage and Monitor Risk -- Proposal to Reduce Costs and Risks to the Safety Net and Financial System -- Restricting Activities of Banking Organizations -- Reforming the Shadow Banking System -- References -- Chapter 22. Ending Too Big to Fail: A Proposal for Reform Richard W. Fisher and Harvey Rosenblum -- Costs of the Financial Crisis -- Earlier Statements on the Need to End TBTF -- Defining and Reducing the Impact of TBTF -- The Role of Market and Regulatory Discipline -- A Proposal for Reform -- It's Not Just Size-Complexity Matters Too -- Concluding Comments -- References -- Part VIII. Where to From Here? The Implications for Financial Regulatory Policy -- Chapter 23. Where to from Here? Implementation, Implementation, Implementation Claudio Borio -- Introduction -- Recognition of the Systemic Dimension of Regulation and Supervision -- Basel III and Systemic Resilience -- International Coordination -- Conclusion -- References -- Chapter 24. Complexity in Financial Regulation Andrew G. Haldane and Vasileios Madouros -- Complexity, Comparability, and Credibility -- Can Less Be More in Finance? -- Leverage versus Risk-Based Capital -- Modelling the Risk of Small Bank Default -- Modeling Financial Risk -- Public Policy Implications -- Conclusion -- References -- Chapter 25. Financial Reform: On the Right Road, at the Right Pace? Thomas F. Huertas -- References -- Chapter 26. Banking Regulation and Supervision in the Next 10 Years and Their Unintended Consequences Danièle Nouy -- Introduction -- Unintended Consequences of New Regulation -- Recapitalization, Deleveraging, and Lending Activity.

Concerns Associated with the Implementation of Basel III Regulation.