At Bangor there is an extensive tradition of empirical research
addressing the long standing public-policy concern of balancing banking
sector market power with regulation. The impact of Professor Molyneux's
research during 2008-2013 has been to inform policy formulation
surrounding the debate about bank monopoly behaviour and its links to
industry efficiency. In particular, his empirical analysis has focused on
the use of non-structural (price-cost or/and price-revenue relationships)
and structural (concentration ratio) measures of competition (and their
links to cost and profit efficiency and various risks). Evidence of the
impact and scope of this research is found in the extensive use of these
measures in publications by, and policy debate within, a variety of
financial organizations at the national, European and international level.
The risk of a systemic crisis and the inability of depositors to monitor
how banks are governed are long-standing public policy concerns. Since
joining Bangor University in 2008 Professor Klaus Schaeck and
collaborators from central banks and international financial organisations
have worked to inform the global policy debate on these issues.
Specifically, how varying competitive conditions, corporate governance
structures and regulatory innovations incentivise the development of safer
and sounder banking systems. Notable impacts of Schaeck's research since
2008 include: the use by central banks of his new methodology to gauge
banking sector competition; priority change in the policy debate over the
structure of bank boards and, in particular, the influence of female
executives; and finally heightened policy awareness of the unintended
consequences of regulations imposed on troubled or bailed-out banks.
Since the global financial crisis triggered by the collapse of the
subprime mortgage market in the United States, a key issue for central
banks has been the extent to which they should use monetary policy, along
with macroprudential tools, to promote financial stability. University of
Manchester (UoM) research has developed small theoretical models, and more
detailed quantitative macroeconomic models, to help address this issue.
This analytical work has helped to: firstly, influence the
policies and operations of several major central banks (Brazil, Turkey and
Morocco); and secondly, fuel the debate about global reform of
bank regulation in international forums, such as the Financial Stability
Board, the Basel Committee on Banking Supervision and annual meetings of
central banks from Latin America. Impact has been achieved through
presentations to these forums, alongside discussions with senior
policymakers from other countries.
Giancarlo Corsetti has a long-term engagement with monetary authorities
(the European Central Bank and since 2010 the Bank of England) where his
research has had an impact on the development of frameworks for analysing
stabilization policies in open economies. Since September 2010, his
research has specifically focused on: (a) monetary policy trade-offs
between internal objectives and exchange rate misalignment and external
imbalances; (b) macroeconomic stabilization with high and variable
sovereign risk; (c) the design of a monetary backstop to government debt.
The research has had an impact through setting policy research agendas;
through the inputs into scenario and econometric analyses; through forming
the basis of Giancarlo's contribution to high-level policy seminars and
the basis of his training of central bank officers.
Research published between 2003 and 2010 on central bank design has
established Sibert as an internationally-recognised authority whose ideas
have changed the way that policy makers, academics and the public think
about monetary policy committees and have influenced efforts to increase
the accountability of these committees and the call to increase female
participation, particularly at the Bank of England and the European
Central Bank. Recognition of the practical value of this research-based
understanding is evident in her 2009 appointment to the newly-formed
Icelandic five-member monetary policy committee.
Sibert's research investigates the structure of central banks and
monetary policy committees, as well as other decision-making groups, and
on how their design affects their performance. In particular, she focuses
on how it matters that monetary policy is made by a group rather than an
individual and how a monetary policy committee can be designed to produce
the best possible outcome for monetary policy. She communicates her
research through refereed journal articles, invited publications; policy
articles, speeches and opinion pieces.
Research by the School's Centre for Finance, Credit and
Macroeconomics (CFCM) on the monetary transmission mechanism has
been influential in improving the design, implementation and effectiveness
of the monetary policies of a number of central banks, including the Bank
of England, Banque de France and the European Central Bank.
The research has influenced changes in the way that official monetary
aggregates are measured so as to capture the impact of non-bank financial
institutions on the money supply and credit availability, and in better
understanding of how monetary policy affects different interest rates.
This in turn has allowed for improved control by central banks of their
policy targets, and for better understanding of the effects of their
monetary policies on economic activity and inflation.
Research carried out at the University of Southampton into banking,
economic growth and development has made Professor Richard Werner a
trusted source of advice for economic policy-makers at the highest level,
for example for the Financial Services Authority, the Independent Banking
Commission, the International Monetary Fund and the Bank of England.
Through articles, books and many media contributions, he has promoted a
greater public understanding of economics and the financial crisis. His
credit creation analysis has also been adopted by two investment funds in
their portfolio management, leading to financial gains for investors,
outperforming the FTSE100.
The global financial crisis of 2008 required policy makers to restructure
radically banking systems through re-capitalization, essentially injecting
capital to the banks. The Unit's research has shown that recapitalization
policy has the potential to impose significant costs on the wider economy
and on the banking system in particular. This research brings this
trade-off to the attention of policy-makers at central banks who will now
be better informed about the nature of the associated costs. . Our
research outputs enabled some of these policy-makers to decide at which
point on the trade-off they might wish to locate their policy choices.
Research by Surrey's Centre for International Macroeconomic Studies
(CIMS) has had significant
impact on monetary policy in several emerging economies.
This case study highlights impact in Nigeria and Pakistan. Both are
economies: Nigeria is the second largest economy in Africa and ranks 30th
by world GDP (adjusted
for purchasing power parity), while Pakistan ranks 27th; yet
GDP per capita is relatively low in both.
Since 2008, Surrey research has: (1) led to the establishment of a new
Centre for Survey
Research at the State Bank of Pakistan, collecting data that have directly
influenced the Bank's
monetary policy; (2) steered reform of the macroeconomic models used by
the State Bank and the
Central Bank of Nigeria; and (3) helped develop a new approach to monetary
The making of monetary policy requires accurate forecasts of key monetary
variables, and in
particular of the inflation rate. Research conducted by Charemza
has led to the development of
new methods of forecasting inflation. The relevant information is
summarised in a Monetary Policy
Indicator (MPI) that can be used to identify the optimal timing of active
monetary policy. Since June
2006, the MPI has been applied by the Monetary Policy Council (MPC) of
Poland in the process of
deciding on the levels of monetary instruments (interest rates and reserve
levels). The use of these
methods has contributed to Poland's economic stability and helped to
growth of the Polish economy in the last decade.