Tag: Market discipline

Understanding climate-related disclosures of UK financial institutions

Jonathan Acosta-Smith, Benjamin Guin, Mauricio Salgado-Moreno and Quynh-Anh Vo

Over the past years, a growing consensus has acknowledged the need to construct a ‘system [wherein] every financial decision takes climate change into account‘. While such a system is still far from reality, market participants already produce and demand an increasing amount of climate-related information. Equally, many authorities around the world are considering mandatory climate-related reporting. These developments raise myriad unanswered questions. We focus on the following in a recent working paper:

  1. How have voluntary, climate-related disclosures of UK financial institutions changed over time?
  2. Can prudential regulators influence current climate-reporting levels just by announcing a future shift to mandatory reporting?

This post summarises the main insights from this paper.

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Who withdraws money from distressed banks?

Benjamin Guin, Martin Brown and Stefan Morkoetter

The recently proposed liquidity regulations for banks under Basel III emphasize the importance of deposit insurance and well-established customer relationships for the stability of bank funding. However, little is known about which clients withdraw their deposits from distressed banks. New survey data covering the behaviour of households in Switzerland during the 2007-2009 crisis suggest that well-established customer relationships are indeed crucial for mitigating withdrawal risk when a bank is in distress.

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