Matthias THIEMANN - Academia.edu (original) (raw)
Papers by Matthias THIEMANN
RePEc: Research Papers in Economics, 2020
Discussions regarding the planned European Deposit Insurance Scheme (EDIS), the missing third pil... more Discussions regarding the planned European Deposit Insurance Scheme (EDIS), the missing third pillar of the European Banking Union, have been ongoing since the Commission published its initial legislative proposal in 2015. A breakthrough in negotiations has yet to be achieved. The gridlock on EDIS is most commonly attributed to moral hazard concerns over insufficient risk reduction harboured on the side of northern member states, particularly Germany, due to the weak state of some other member states' banking sectors. While moral hazard based on uneven risk reduction is helpful for explaining divergent member-state preferences on the scope of necessary risk reduction, this does not explain preferences on the institutional design of EDIS. In this paper, we argue that contrary to persistent differences on necessary risk reduction, preferences regarding the institutional design of EDIS have become more closely aligned. We analyse how preferences on EDIS developed in the key member states of Germany, France, and Italy. In all sampled countries, we find path-dependent benefits connected to the current design of national Deposit Guarantee Schemes (DGS) that shifted preferences of the banking sector or significant subsectors in favour of retaining national DGSs. Overall, given that a compromise on riskreduction can be accomplished, we argue that current preferences in these key member states provide an opportunity to implement EDIS in the form of a reinsurance system that maintains national DGSs in combination with a supranational fund.
Regulation & Governance, Jun 11, 2022
Regulation & Governance
Edward Elgar Publishing eBooks, Jul 14, 2023
The Oxford Handbook of International Political Economy
This article reviews the literature on regulation in International Political Economy. It shows th... more This article reviews the literature on regulation in International Political Economy. It shows that during recent decades, the study of this topic gradually shifted from a positivist to a more sociologically-informed understanding of the formation, reproduction, and change of regulatory orders. This evolution, it is argued, was motivated by various attempts at locating the plural and often contingent appearances of power in these settings—including the (infra)structural power of firms, the structural mismatches between global and domestic regulations, and the manipulation of regulatory ideas and concepts. Research on financial regulation in the post-crisis era was instrumental in this turn.
Deciphering the European Investment Bank
Journal of European Integration, 2022
ABSTRACT This article examines the impact of supranational investment policies on the resilience ... more ABSTRACT This article examines the impact of supranational investment policies on the resilience of the common market project and its impact on core-periphery dynamics. Reconstructing the hybrid governance processes around the Investment Plan for Europe (2015–2020) and its geographical distribution, it finds that these policies were effective in channelling funds to the Southern periphery after the Eurozone crisis, but aggravated the core-periphery dynamic for Eastern Europe. This fact stems from the differential presence of national public financing institutions as well as unevenly developed capital markets, two factors that are linked to the multi-level and public-private governance mix in the EU’s investment policies. These results hold implications for how to assess follow-up programs such as InvestEU and the Sustainable Investment Plan in the European Green Deal.
The Routledge International Handbook of Financialization, 2020
Post-crisis, macro-prudential ideas have challenged the epistemic authority of private risk manag... more Post-crisis, macro-prudential ideas have challenged the epistemic authority of private risk management technologies, declaring them to be pro-cyclical contributors to systemic risk. This discursive challenge has been most critical of the shadow banking system, where private risk management instruments are central. This challenge, however, has not been translated into regulatory tools which reflect these convictions. This paper studies this process of discursive challenge to (failed) regulatory intervention for the case of the repo-market, the heart of the current shadow banking system. It traces regulatory efforts on the global and EU level from regulatory statements to (lack of) action, documenting both the persistent articulation of macro-prudential ideas challenging private risk-management systems and timid to no regulatory intervention. It links this hiatus to international coordination problems, the need for macro-prudential action to span regulatory communities, involving bank...
OECD, "SME responses", note prepared for discussion by the OECD Working Party on SMEs and Entrepr... more OECD, "SME responses", note prepared for discussion by the OECD Working Party on SMEs and Entrepreneurship (WPSMEE), last updated: 30 March 2020; HAINBACK and REKEDER, "Flattening the Recession Curve. Comparing Initial Fiscal Responses to the Corona Crisis Across the EU", Hertie School Jacques Delors Centre, 9 April 2020. 2. Acronyms stand for European Investment Bank, the German Kreditanstalt für Wiederaufbau, the French Bpifrance, the Italian Cassa Depositi e Prestiti and the Spanish Instituto de Crédito Official.
National development banks (NDBs) have transformed from outdated relics of national industrial po... more National development banks (NDBs) have transformed from outdated relics of national industrial policy to central pillars of the European Union’s economic project. This trend, which accelerated after the Financial Crisis of 2007, has led to a proliferation of NDBs with an expanded size and scope. However, it is surprising that the EU—which has championed market-oriented governance and strict competition policy—has actually advocated an expansion of NDBs. This book therefore asks, why has the EU supported an increased role for NDBs, and how can we understand the dynamics between NDBs and European incentives and constraints? In order to answer these questions, this book analyzes the formation and evolution of a field of development banking within the EU. We identify a new field around an innovative conceptualization of state-backed financing for the purposes of policy implementation. However, rather than focusing solely on national development banks, we instead broaden the focus to the...
Competition & Change, 2020
At the heart of the last financial crisis stood the shadow banking system, a mesh of financial ac... more At the heart of the last financial crisis stood the shadow banking system, a mesh of financial activities and entities that grew outside of bank balance sheets but with the support of the banking sector. These activities were not regulated or supervised like banks, and they were characterized by high maturity mismatches and leverage. Two prime elements were Money Market Mutual Funds and Asset-Backed Commercial Papers, which jointly performed bank-like functions. This paper sheds light on the fate of these entities post-crisis and the regulatory dynamics at play as policymakers shifted their focus from constraining their activities to drafting a European regulatory infrastructure that delivers both stability and growth. Based on expert interviews and document analysis, we show how European policymakers opened up to private experts during this shift to learn about the technical complexity of Money Market Mutual Funds and Asset-Backed Commercial Papers, but in the end were restricted i...
Journal of Economic Policy Reform, 2018
The European Commission's proposal for a Bank Structural Reform (BSR) aimed at increasing banks' ... more The European Commission's proposal for a Bank Structural Reform (BSR) aimed at increasing banks' resolvability through separating risky trading activities from deposit-taking institutions. In contrast to initial plans, the final proposal exempted market-making activities of banks. This exemption, we argue, was brought about by the Commission's discursive framing of the BSR as a balancing act between stability and growth. Coupled with the incapacity to unambiguously measure the effects of the reform on market liquidity and on growth, this pushed the assessment of market-making from the technical to the political realm, leading to a reproduction of the prevalent market-based banking system.
New Political Economy, 2019
In 2013, the Governor of the Bank of England heralded that the Bank of England is 'open for busin... more In 2013, the Governor of the Bank of England heralded that the Bank of England is 'open for business': ready to buy and sell every asset it can value, thereby adjusting the role of the Bank of England to the demands of market-based finance. This article examines this re-articulation of the role of central banks in financial markets, situating it in the context of the recently enacted Basel III regulatory reforms. By placing a regulatory price on private liquidity provision, Basel III hampers broker-dealers' market-making capacity and the liquidity of assets used as collateral in repo-transactions. The BoE aims to counter these fragilities of marketbased finance, providing a potential backstop for market prices. Endorsing entrepreneurial principles, a hallmark of neoliberal reason, this hybrid mode of external and internal intervention establishes a new balance in the relationship between central banks and private market actors. Our paper complements analyses which showed that such liquidity-providing interventions of central banks are of institutional necessity by highlighting how regulators and central bankers engage with this task. We show that the 'cultivation of market liquidity' is driven by the intention to transform shadow-banking into a value for society, therefore accepting to engage in an investment.
The Growth of Shadow Banking, 2018
The 'shadow banking system' refers to a system of credit-provision occurring outside of t... more The 'shadow banking system' refers to a system of credit-provision occurring outside of the official regulatory perimeter of commercial banks. Facilitated by securitization vehicles, mutual funds, hedge funds, investment banks and mortgage companies, the function and regulation of these shadow banking institutions has come under increasing scrutiny after the subprime crisis of 2007–8. Matthias Thiemann examines how regulators came to tolerate the emergence of links between the banking and shadow banking systems. Through a comparative analysis of the US, France, the Netherlands and Germany, he argues that fractured domestic and global governance systems determining the regulatory approach to these links ultimately aggravated the recent financial crisis. Since 2008, shadow banking has even expanded and the incentives for banks to bend the rules have only increased with increasing regulation. Thiemann's empirical work suggests how state-finance relations could be restructured to keep the banking system under state control and avoid future financial collapses.
SSRN Electronic Journal, 2016
Since the outbreak of the financial crisis, the macro-prudential policy paradigm has gained incre... more Since the outbreak of the financial crisis, the macro-prudential policy paradigm has gained increasing prominence (Bank of England, 2009; Bernanke, 2011). The dynamics of this shift in the economic discourse, and the reasons this shift has not taken place prior to the crisis have not been addressed systemically. This paper investigates the evolution of the economic discourse on systemic risk and banking regulation to better understand these changes and their timing. Further, we use our sample to inquire whether, and if so, why the economic regulatory studies failed to recommend a reliable banking regulation prior to the crisis.. By following a discourse analysis, we establish that the economic discourse on banking regulation has not been suitable for providing the knowledge basis required for a dynamically reliable banking regulation, and we identify the underlying reasons for such failure. These reasons include the obsession of economic discourse with optimization and particular forms of formalism, particularly, partial equilibrium analysis. Further, the economic discourse on banking regulation excludes historical and practitioners' discourses and ignores weak signals. We point out that post-crisis, these epistemological failures of the economic discourse on banking regulation were not sufficiently recognized and that recent attempts to conceptualize systemic risk as a negative externality and to thus price it point to the persistence of formalism, equilibrium thinking and optimization, with their attending dangers.
RePEc: Research Papers in Economics, 2020
Discussions regarding the planned European Deposit Insurance Scheme (EDIS), the missing third pil... more Discussions regarding the planned European Deposit Insurance Scheme (EDIS), the missing third pillar of the European Banking Union, have been ongoing since the Commission published its initial legislative proposal in 2015. A breakthrough in negotiations has yet to be achieved. The gridlock on EDIS is most commonly attributed to moral hazard concerns over insufficient risk reduction harboured on the side of northern member states, particularly Germany, due to the weak state of some other member states' banking sectors. While moral hazard based on uneven risk reduction is helpful for explaining divergent member-state preferences on the scope of necessary risk reduction, this does not explain preferences on the institutional design of EDIS. In this paper, we argue that contrary to persistent differences on necessary risk reduction, preferences regarding the institutional design of EDIS have become more closely aligned. We analyse how preferences on EDIS developed in the key member states of Germany, France, and Italy. In all sampled countries, we find path-dependent benefits connected to the current design of national Deposit Guarantee Schemes (DGS) that shifted preferences of the banking sector or significant subsectors in favour of retaining national DGSs. Overall, given that a compromise on riskreduction can be accomplished, we argue that current preferences in these key member states provide an opportunity to implement EDIS in the form of a reinsurance system that maintains national DGSs in combination with a supranational fund.
Regulation & Governance, Jun 11, 2022
Regulation & Governance
Edward Elgar Publishing eBooks, Jul 14, 2023
The Oxford Handbook of International Political Economy
This article reviews the literature on regulation in International Political Economy. It shows th... more This article reviews the literature on regulation in International Political Economy. It shows that during recent decades, the study of this topic gradually shifted from a positivist to a more sociologically-informed understanding of the formation, reproduction, and change of regulatory orders. This evolution, it is argued, was motivated by various attempts at locating the plural and often contingent appearances of power in these settings—including the (infra)structural power of firms, the structural mismatches between global and domestic regulations, and the manipulation of regulatory ideas and concepts. Research on financial regulation in the post-crisis era was instrumental in this turn.
Deciphering the European Investment Bank
Journal of European Integration, 2022
ABSTRACT This article examines the impact of supranational investment policies on the resilience ... more ABSTRACT This article examines the impact of supranational investment policies on the resilience of the common market project and its impact on core-periphery dynamics. Reconstructing the hybrid governance processes around the Investment Plan for Europe (2015–2020) and its geographical distribution, it finds that these policies were effective in channelling funds to the Southern periphery after the Eurozone crisis, but aggravated the core-periphery dynamic for Eastern Europe. This fact stems from the differential presence of national public financing institutions as well as unevenly developed capital markets, two factors that are linked to the multi-level and public-private governance mix in the EU’s investment policies. These results hold implications for how to assess follow-up programs such as InvestEU and the Sustainable Investment Plan in the European Green Deal.
The Routledge International Handbook of Financialization, 2020
Post-crisis, macro-prudential ideas have challenged the epistemic authority of private risk manag... more Post-crisis, macro-prudential ideas have challenged the epistemic authority of private risk management technologies, declaring them to be pro-cyclical contributors to systemic risk. This discursive challenge has been most critical of the shadow banking system, where private risk management instruments are central. This challenge, however, has not been translated into regulatory tools which reflect these convictions. This paper studies this process of discursive challenge to (failed) regulatory intervention for the case of the repo-market, the heart of the current shadow banking system. It traces regulatory efforts on the global and EU level from regulatory statements to (lack of) action, documenting both the persistent articulation of macro-prudential ideas challenging private risk-management systems and timid to no regulatory intervention. It links this hiatus to international coordination problems, the need for macro-prudential action to span regulatory communities, involving bank...
OECD, "SME responses", note prepared for discussion by the OECD Working Party on SMEs and Entrepr... more OECD, "SME responses", note prepared for discussion by the OECD Working Party on SMEs and Entrepreneurship (WPSMEE), last updated: 30 March 2020; HAINBACK and REKEDER, "Flattening the Recession Curve. Comparing Initial Fiscal Responses to the Corona Crisis Across the EU", Hertie School Jacques Delors Centre, 9 April 2020. 2. Acronyms stand for European Investment Bank, the German Kreditanstalt für Wiederaufbau, the French Bpifrance, the Italian Cassa Depositi e Prestiti and the Spanish Instituto de Crédito Official.
National development banks (NDBs) have transformed from outdated relics of national industrial po... more National development banks (NDBs) have transformed from outdated relics of national industrial policy to central pillars of the European Union’s economic project. This trend, which accelerated after the Financial Crisis of 2007, has led to a proliferation of NDBs with an expanded size and scope. However, it is surprising that the EU—which has championed market-oriented governance and strict competition policy—has actually advocated an expansion of NDBs. This book therefore asks, why has the EU supported an increased role for NDBs, and how can we understand the dynamics between NDBs and European incentives and constraints? In order to answer these questions, this book analyzes the formation and evolution of a field of development banking within the EU. We identify a new field around an innovative conceptualization of state-backed financing for the purposes of policy implementation. However, rather than focusing solely on national development banks, we instead broaden the focus to the...
Competition & Change, 2020
At the heart of the last financial crisis stood the shadow banking system, a mesh of financial ac... more At the heart of the last financial crisis stood the shadow banking system, a mesh of financial activities and entities that grew outside of bank balance sheets but with the support of the banking sector. These activities were not regulated or supervised like banks, and they were characterized by high maturity mismatches and leverage. Two prime elements were Money Market Mutual Funds and Asset-Backed Commercial Papers, which jointly performed bank-like functions. This paper sheds light on the fate of these entities post-crisis and the regulatory dynamics at play as policymakers shifted their focus from constraining their activities to drafting a European regulatory infrastructure that delivers both stability and growth. Based on expert interviews and document analysis, we show how European policymakers opened up to private experts during this shift to learn about the technical complexity of Money Market Mutual Funds and Asset-Backed Commercial Papers, but in the end were restricted i...
Journal of Economic Policy Reform, 2018
The European Commission's proposal for a Bank Structural Reform (BSR) aimed at increasing banks' ... more The European Commission's proposal for a Bank Structural Reform (BSR) aimed at increasing banks' resolvability through separating risky trading activities from deposit-taking institutions. In contrast to initial plans, the final proposal exempted market-making activities of banks. This exemption, we argue, was brought about by the Commission's discursive framing of the BSR as a balancing act between stability and growth. Coupled with the incapacity to unambiguously measure the effects of the reform on market liquidity and on growth, this pushed the assessment of market-making from the technical to the political realm, leading to a reproduction of the prevalent market-based banking system.
New Political Economy, 2019
In 2013, the Governor of the Bank of England heralded that the Bank of England is 'open for busin... more In 2013, the Governor of the Bank of England heralded that the Bank of England is 'open for business': ready to buy and sell every asset it can value, thereby adjusting the role of the Bank of England to the demands of market-based finance. This article examines this re-articulation of the role of central banks in financial markets, situating it in the context of the recently enacted Basel III regulatory reforms. By placing a regulatory price on private liquidity provision, Basel III hampers broker-dealers' market-making capacity and the liquidity of assets used as collateral in repo-transactions. The BoE aims to counter these fragilities of marketbased finance, providing a potential backstop for market prices. Endorsing entrepreneurial principles, a hallmark of neoliberal reason, this hybrid mode of external and internal intervention establishes a new balance in the relationship between central banks and private market actors. Our paper complements analyses which showed that such liquidity-providing interventions of central banks are of institutional necessity by highlighting how regulators and central bankers engage with this task. We show that the 'cultivation of market liquidity' is driven by the intention to transform shadow-banking into a value for society, therefore accepting to engage in an investment.
The Growth of Shadow Banking, 2018
The 'shadow banking system' refers to a system of credit-provision occurring outside of t... more The 'shadow banking system' refers to a system of credit-provision occurring outside of the official regulatory perimeter of commercial banks. Facilitated by securitization vehicles, mutual funds, hedge funds, investment banks and mortgage companies, the function and regulation of these shadow banking institutions has come under increasing scrutiny after the subprime crisis of 2007–8. Matthias Thiemann examines how regulators came to tolerate the emergence of links between the banking and shadow banking systems. Through a comparative analysis of the US, France, the Netherlands and Germany, he argues that fractured domestic and global governance systems determining the regulatory approach to these links ultimately aggravated the recent financial crisis. Since 2008, shadow banking has even expanded and the incentives for banks to bend the rules have only increased with increasing regulation. Thiemann's empirical work suggests how state-finance relations could be restructured to keep the banking system under state control and avoid future financial collapses.
SSRN Electronic Journal, 2016
Since the outbreak of the financial crisis, the macro-prudential policy paradigm has gained incre... more Since the outbreak of the financial crisis, the macro-prudential policy paradigm has gained increasing prominence (Bank of England, 2009; Bernanke, 2011). The dynamics of this shift in the economic discourse, and the reasons this shift has not taken place prior to the crisis have not been addressed systemically. This paper investigates the evolution of the economic discourse on systemic risk and banking regulation to better understand these changes and their timing. Further, we use our sample to inquire whether, and if so, why the economic regulatory studies failed to recommend a reliable banking regulation prior to the crisis.. By following a discourse analysis, we establish that the economic discourse on banking regulation has not been suitable for providing the knowledge basis required for a dynamically reliable banking regulation, and we identify the underlying reasons for such failure. These reasons include the obsession of economic discourse with optimization and particular forms of formalism, particularly, partial equilibrium analysis. Further, the economic discourse on banking regulation excludes historical and practitioners' discourses and ignores weak signals. We point out that post-crisis, these epistemological failures of the economic discourse on banking regulation were not sufficiently recognized and that recent attempts to conceptualize systemic risk as a negative externality and to thus price it point to the persistence of formalism, equilibrium thinking and optimization, with their attending dangers.