The essay prize is awarded annually with the purpose of stimulating profound thinking for the financial regulation internationally and of highlighting distinguished work to policymakers and a wider global audience.
Shin Hyun-Song is the Hughes-Rogers Professor of Economics at Princeton University. He has been a senior adviser to Korean President Lee Myung-bak on the international economy, and he also played a key role in the G20 Seoul Summit in November. Before coming to Princeton in 2006, he was Professor of Finance at the London School of Economics. His current research interests are in financial economics with particular reference to financial institutions, disclosures, risk and financial stability issues, topics on which he has published widely both in academic and practitioner outlets. He has served in an advisory capacity to central banks and policy organizations on financial stability issues.
The theme of the 2010 prize was the "The Future of the G20 and Financial Regulation," and Prof. Shin's paper was entitled "Macroprudential Policies Beyond Basel III."
In a blind judging process, the judging panel picked Prof. Shin's entry, noting its strong analysis of the need for effective macroprudential progress by the G20 to bolster a Basel III accord that is almost entirely microprudential in character. In particular, the essay underlines that pure focus on loss absorbency diverts attention from the liabilities side of the balance sheet, and that keeping track of the growth of fragile, non-core liabilities is vital to macroprudential early warnings in booms. Prof. Shin outlines the limited monetary policy options in the Eurozone and many developing economies, and examines the effectiveness of macroprudential tools such as loan-to-value ratio, debt-service-to-income and leverage caps, emphasising the potential attractiveness of a levy on non-core liabilities to align incentives more powerfully.
Looking at data from examples such as Northern Rock, US repos/financial CP and the Korean banking sector, the paper also analyses the way in which a growth in non-core liabilities is accompanied by a maturity shortening of liabilities, as a consequence of longer intermediation chains and the need to maintain a lending spread for each link in the chain.
Two other impressive essays, both on compensation practices among financial firms, submitted jointly by Joel Shapiro, Patrick Bolton, and Hamid Mehran, and by Guido Ferrarini and Maria Cristina Ungureanu, will be awarded runner‐up prizes. All three winning essays can be found at: http://www.icffr.org/Research/Research-Prizes/Research-Prize-2010/ICFR-Research-Prize-2010—-Winning-Essay.aspx.
The judging panel was led by Lord Currie, Chairman of the ICFR, and also included Brooke Masters, Chief Regulatory Correspondent of the Financial Times, Dr Richard Reid, Director of Research of the ICFR, and Dr Philipp Hartmann.
Lord Currie commented: "Contributing to the G20 financial regulatory debate is a central objective of the ICFR, and we're delighted that this year's winner has raised important issues – especially around non-core liabilities - that are central to the most challenging macroprudential and countercyclical aspects of the G20 agenda. Increasing academic attention is being focused on the liability side of bank balance sheets, and the impact of leverage and increasingly short-term borrowing on the depth of the financial crisis. Prof. Shin's paper is a key contribution to this work, and will ultimately have significant implications for financial institutions.
"The ICFR/Financial Times prize has now become well established on the financial regulatory scene, and we were impressed at the strength of entries from around the world."
Lionel Barber, editor of the Financial Times, said: "How best to tax financial services is one of the most pressing public policy challenges after the financial crisis. The winning entry offers a stimulating answer which should attract interest among policymakers worldwide."
For further information including a photo of Professor Shin please contact:
Andrew Marshall/Andrew Lewin
+44 (0) 207 839 4321 / +44 (0) 7808 579563
The Seoul Times
Shinheungro 25-gil 2-6
Yongsan-gu, Seoul, Korea
Office: 82-10-6606-6188 Email:firstname.lastname@example.org
Copyrights 2000 The Seoul Times Company ST Banner Exchange