Setting boundaries: finding thresholds in bank regulation

Zahid Amadxarif, Paula Gallego Marquez and Nic Garbarino

“We’ve done a lot to lower prudential barriers to entry into the banking sector […] but have we done enough to lower the equivalent barriers to growth?” asked PRA CEO Sam Woods in a recent speech. To make regulation proportionate, policymakers adapt regulatory requirements to the risks posed by each firm. But regulators face a trade-off between addressing systemic risks in a proportionate way and limiting regulatory complexity. New thresholds can create complexity and cliff-edge effects that can discourage healthy firms from growing. We identify regulatory thresholds for UK banks and building societies using textual analysis on a new dataset that contains the universe of prudential rules.

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What’s in the News? Text-Based Confidence Indices and Growth Forecasts

Arthur Turrell, Nikoleta Anesti and Silvia Miranda-Agrippino.

As the American playwright Arthur Miller wrote, “A good newspaper, I suppose, is a nation talking to itself.” Using text analysis and machine learning, we decided to put this to test – to find out whether newspaper copy could tell us about the national economy, and in particular, whether it can help us predict GDP growth.

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Back to the future: why we’re optimists in the secular stagnation debate

Saara Tuuli & Sandra Batten

Seven years after the financial crisis, global growth remains anaemic and the policy setting is nowhere near normal.  Some commentators have suggested that this reflects some kind of ‘secular stagnation’ which set in before the crisis.  This would have profound consequences for future growth and development in both wealthy and poorer countries. We are more optimistic, and see a raft of emerging technologies that could transform growth in many sectors.  In this post, we summarise the current debate and offer our views on it.

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