Délio José Cordeiro Galvão

Financial regulation and transparency of information: evidence from banking industry

Purpose - The purpose of this paper is to see if a difference exists between the impact of the subprime crisis on countries with more transparency and more regulated finance than on others. A further objective is to explain the success of the Brazilian case in avoiding the financial crisis and to show empirical evidence for the presence of market discipline. Design/methodology/approach - The paper offers a regulation and transparency index (RTI) based on 37 countries. Considering RTI and stock market index of developed economies, BRICs economies, and developing economies, cross-country estimations are made. Furthermore, the analysis for market discipline in the Brazilian case is based on GMM panels, taking into account market discipline through subordinated debt holders (debentures). Findings - The results indicate that a higher degree of regulation and transparency is related to a higher return and a lower volatility in the stock market during the subprime crisis. Moreover, one of the main reasons for the apparent success of the Brazilian case in facing the crisis is the combination of a strong regulation of the financial system and the presence of market discipline. Practical implications - Transparency of information by the banking sector is relevant for the regulation of the financial system. Originality/value - The paper presents new insights for the literature on financial regulation and transparency of information in the search for a framework capable of avoiding financial crisis.

Estimation of economic capital for operational risk in banking industry: a Brazilian case

This article presents an analysis for the estimation of economic capital concerning operational risk in a Brazilian banking industry case making use of Markov chains, Extreme Value Theory (EVT) and Peaks Over Threshold (POT) modelling. The findings denote that some existent methods present consistent results among institutions with similar characteristics of loss data.

Regulação e transparência: evidências a partir da crise do subprime

This article highlights the moment when the liquidity shock occurred in the period after the subprime crisis in the USA and has as the main objectives: (i) to build an index of informational transparency, taking into consideration both aspects of regulation and of self-disclosure; and (ii) to make a relation of this index with the stock market performance. This study considers large financial institutions from 25 countries divided in four groups of countries: developed, developing, BRIC, and PIGS. The findings denote that reducing the flexibility in the rules of supervision can lead to lesser vulnerability of the financial markets. In brief, the results found strengthen the idea that the regulation of the financial system is not neutral in macroeconomic terms.