Question A:

Research on the nature and impact of bank runs has made it possible to limit substantially the wider economic damage from financial crises.

Responses weighted by each expert's confidence

Question B:

Reforms of financial regulation since 2008 (and macroprudential policies in some countries) will not substantially reduce the probability of financial crises.

Responses weighted by each expert's confidence

Question A Participant Responses

Participant University Vote Confidence Bio/Vote History
Campbell
John Campbell
Harvard
Agree
8
Bio/Vote History
Cochrane
John Cochrane
Hoover Institution Stanford
Strongly Agree
7
Bio/Vote History
I agree, though not for the usual reason. Research shows just what it takes to cause runs, and opens the door to the effective solution rather than current patches: Equity financed banking and narrow deposit taking.
Cornelli
Francesca Cornelli
Northwestern Kellogg
Strongly Agree
8
Bio/Vote History
Diamond
Douglas Diamond
Chicago Booth
Uncertain
5
Bio/Vote History
We understand crises and systemic risk much better than 100 years ago. Crises are still possible and the magnitude of their impact is reduced by deposit insurance, supervision, regulation and ex-post intervention. I think that there remains a significant impact.
Duffie
Darrell Duffie
Stanford
Agree
10
Bio/Vote History
Yes, this research has made a big difference, with respect to bank runs. But we must bear in mind the Global Financial Crisis, which came well after this research was understood by regulators. Much more needs to be done.
Eberly
Janice Eberly
Northwestern Kellogg
Agree
6
Bio/Vote History
Better understanding run dynamics helps to identify and implement better policies. But financial crises are broader than banks and bank runs, and regulatory arbitrage (among other limitations) limits their effectiveness in practice.
Gabaix
Xavier Gabaix
Harvard
Agree
8
Bio/Vote History
Goldstein
Itay Goldstein
UPenn Wharton
Agree
10
Bio/Vote History
Graham
John Graham
Duke Fuqua
Disagree
9
Bio/Vote History
research might have reduced the economic damage but I don't think it "substantially" reduced it, as the question asks.
Hansen
Lars Hansen
UChicago
Agree
6
Bio/Vote History
The term ``made is possible'' is actually too strong and ``substantially limit'' is too vague. The research was an important contributor to the constructive policies that were implemented in our most recent global financial crisis.
Harvey
Campbell R. Harvey
Duke Fuqua
Strongly Agree
8
Bio/Vote History
Hirshleifer
David Hirshleifer
USC
Agree
8
Bio/Vote History
Hong
Harrison Hong
Columbia
Agree
6
Bio/Vote History
There is evidence from a number of episodes that government backstops help alleviate panics.
Jiang
Wei Jiang
Emory Goizueta
Agree
8
Bio/Vote History
Kaplan
Steven Kaplan
Chicago Booth
Agree
6
Bio/Vote History
Kashyap
Anil Kashyap
Chicago Booth
Disagree
5
Bio/Vote History
Research has helped us spot and understand risks, but not always limit the damage substantially. Lots of constraints, for instance look at the money market funds. They have been a risk in plain sight yet they are still not safe. See the IGM Brookings report for more examples
-see background information here
Koijen
Ralph Koijen
Chicago Booth
Agree
8
Bio/Vote History
Kuhnen
Camelia Kuhnen
UNC Kenan-Flagler
Agree
6
Bio/Vote History
Lo
Andrew Lo
MIT Sloan
Strongly Agree
10
Bio/Vote History
Lowry
Michelle Lowry
Drexel LeBow
Agree
4
Bio/Vote History
Ludvigson
Sydney Ludvigson
NYU
Agree
7
Bio/Vote History
Maggiori
Matteo Maggiori
Stanford GSB
Agree
3
Bio/Vote History
The research has certainly improved our understanding of these crises. Our management of the crises has improved...as for "substantially", I am not sure. Certainly better than how the Fed managed the great depression.
Matvos
Gregor Matvos
Northwestern Kellogg
Agree
10
Bio/Vote History
Moskowitz
Tobias Moskowitz
Yale School of Management
Agree
6
Bio/Vote History
I think we have learned what can cause or exacerbate a bank run and that he led us to enact measures and policies that might help mitigate or slow it down. But, this is not my primary area of expertise.
Nagel
Stefan Nagel
Chicago Booth
Agree
7
Bio/Vote History
With emphasis that "made it possible to limit" is not the same as "has in practice, everywhere limited"
Parker
Jonathan Parker
MIT Sloan
Strongly Agree
8
Bio/Vote History
Examples abound, but US response to the 2008 financial crisis included an alphabet soup of programs, each designed as a roughly optimal mechanism to deal with a particular problem of asymmetric information identified in theoretical and empirical research.
-see background information here
-see background information here
Parlour
Christine Parlour
Berkeley Haas
Agree
7
Bio/Vote History
Philippon
Thomas Philippon
NYU Stern
Agree
9
Bio/Vote History
Puri
Manju Puri
Duke Fuqua
Strongly Agree
9
Bio/Vote History
Roberts
Michael R. Roberts
UPenn Wharton
Uncertain
6
Bio/Vote History
Sapienza
Paola Sapienza
Northwestern Kellogg
Agree
5
Bio/Vote History
In ST, yes. In LT, unclear. Research does not help distinguishing between crisis caused by panic or insolvency. Research showing crisis maybe generated by liquidity crisis -> governments intervened too often even when banks insolvent (Ireland 2008). Increase moral hazard in LT.
Seru
Amit Seru
Stanford GSB
Agree
10
Bio/Vote History
We understand some of the economic forces. But the policies that have followed leave much to be desired.
Stambaugh
Robert Stambaugh
UPenn Wharton
Uncertain
2
Bio/Vote History
Starks
Laura Starks
UT Austin McCombs
Agree
5
Bio/Vote History
Not sure that damages can always be substantially limited.
Stein
Jeremy Stein
Harvard
Agree
6
Bio/Vote History
Stroebel
Johannes Stroebel
NYU Stern
Disagree
5
Bio/Vote History
Sufi
Amir Sufi
Chicago Booth
Agree
10
Bio/Vote History
Titman
Sheridan Titman
UT Austin McCombs
Agree
5
Bio/Vote History
Van Nieuwerburgh
Stijn Van Nieuwerburgh
Columbia Business School
Agree
8
Bio/Vote History
Research on financial fragility has informed the design of macroprudential policy, modern bank supervisory regime, stress testing, etc., all of which has made banks much safer.
Werner
Ingrid M. Werner
OSU Fisher School
Agree
8
Bio/Vote History
Whited
Toni Whited
UMich Ross School
Strongly Agree
8
Bio/Vote History

Question B Participant Responses

Participant University Vote Confidence Bio/Vote History
Campbell
John Campbell
Harvard
Disagree
7
Bio/Vote History
Reforms have had some effect, particularly on large US banks, but there remains a meaningful risk of financial crises.
Cochrane
John Cochrane
Hoover Institution Stanford
Strongly Agree
8
Bio/Vote History
The current wave of reform is one more larger patch on the same leaky boat. Guarantee more creditors, ever larger bailouts, promise that this time regulators will see risks ahead of time. It failed again in 2020.
Cornelli
Francesca Cornelli
Northwestern Kellogg
Disagree
6
Bio/Vote History
Although no regulatory step can eliminate the possibility that new practices may lead to crisis, recent reforms have at least eliminated some channels
Diamond
Douglas Diamond
Chicago Booth
Disagree
6
Bio/Vote History
Although the probability remains significant, I think it is reduced. Stress tests and capital requirements in the regulated banking sector make it more stable. Risks remain as some of the risks migrate out of that sector.
Duffie
Darrell Duffie
Stanford
Strongly Disagree
10
Bio/Vote History
Reforms have more than doubled big-bank capital buffers and significantly increased their liquidity coverage--big improvements. But, as we have seen recently (Gilt market), non-bank financial stability concerns remain, bond market design is weak, and much more needs to be done.
Eberly
Janice Eberly
Northwestern Kellogg
Uncertain
7
Bio/Vote History
There is large variation across countries in regulation and enforcement, plus dissimilar changes post-2008, so better to learn from heterogeneity than to draw broad conclusions. Moreover, the shocks going forward are not necessarily those that drove recent regulatory changes.
Gabaix
Xavier Gabaix
Harvard
Disagree
7
Bio/Vote History
Goldstein
Itay Goldstein
UPenn Wharton
Uncertain
10
Bio/Vote History
Graham
John Graham
Duke Fuqua
Agree
9
Bio/Vote History
it might have reduced probability of a crisis but I don't think "substantially" reduced it.
Hansen
Lars Hansen
UChicago
Uncertain
7
Bio/Vote History
Reforms across countries are heterogeneous in form and magnitude, some of which seem ill conceived and counterproductive and others that look to be prudent.
Harvey
Campbell R. Harvey
Duke Fuqua
Agree
7
Bio/Vote History
Though it is unlikely to be "substantial" reduction, there might be a small reduction. However, at what cost? Heavy-handed regulation may reduce growth opportunities in the economy.
Hirshleifer
David Hirshleifer
USC
No Opinion
Bio/Vote History
Hong
Harrison Hong
Columbia
Uncertain
8
Bio/Vote History
Regulations often target yesterday's problems. Financial innovations like crypto are difficult to keep up with for a variety of reasons including political economy ones.
Jiang
Wei Jiang
Emory Goizueta
Agree
7
Bio/Vote History
Kaplan
Steven Kaplan
Chicago Booth
Uncertain
2
Bio/Vote History
Kashyap
Anil Kashyap
Chicago Booth
Agree
5
Bio/Vote History
Too much activity has migrated into the shadow banking system. The banks, at least in US and UK, are definitely stronger and safer, but the 2008 reforms were incomplete. See the same report
Koijen
Ralph Koijen
Chicago Booth
Disagree
3
Bio/Vote History
Kuhnen
Camelia Kuhnen
UNC Kenan-Flagler
Strongly Disagree
7
Bio/Vote History
Lo
Andrew Lo
MIT Sloan
Disagree
10
Bio/Vote History
Lowry
Michelle Lowry
Drexel LeBow
Agree
3
Bio/Vote History
One of the biggest challenges in preventing future crises relates to the fact that the underlying triggers are often different.
Ludvigson
Sydney Ludvigson
NYU
Uncertain
7
Bio/Vote History
some previous risks will have been reduced while new macro-prudential policies could create new ones.
Maggiori
Matteo Maggiori
Stanford GSB
No Opinion
Bio/Vote History
The question is not answerable. It is asking for a quantitative assessment about "substantially reducing a probability" without defining substantially.
Matvos
Gregor Matvos
Northwestern Kellogg
Disagree
10
Bio/Vote History
Increased bank capital requirements help but could be substantially larger to promote stability without large social costs. Regulation generated large outflows to lightly regulated shadow banks and should also account for banks' adjustment on the retain vs. securitize margin.
-see background information here
-see background information here
-see background information here
-see background information here
-see background information here
Moskowitz
Tobias Moskowitz
Yale School of Management
Uncertain
5
Bio/Vote History
Financial crises do not occur frequently, hence it is difficult to know how effective reforms to prevent or lessen them will be. However, there is increasing micro evidence that supply-side channels have impact and hence reforms that target that could plausibly matter.
Nagel
Stefan Nagel
Chicago Booth
Disagree
7
Bio/Vote History
Banks are funded with more equity than before, which helps. But vulnerabilities may shift into poorly regulated areas. Actions taken by central banks to fight crises in the past may have unintended consequences in the future. On balance a bit better, but not much.
Parker
Jonathan Parker
MIT Sloan
Uncertain
9
Bio/Vote History
Current regulation is largely predicated on regulators anticipating, measuring, and managing risks inside the financial sector that they sit apart from. Might not work well? Eg last week, an interest rate rise destabilized UK defined-benefit pensions and government debt markets.
Parlour
Christine Parlour
Berkeley Haas
Agree
8
Bio/Vote History
Philippon
Thomas Philippon
NYU Stern
Strongly Disagree
10
Bio/Vote History
the reforms have already reduced the risk of crises, a lot, but not down to zero.
Puri
Manju Puri
Duke Fuqua
Agree
4
Bio/Vote History
Roberts
Michael R. Roberts
UPenn Wharton
Uncertain
6
Bio/Vote History
Sapienza
Paola Sapienza
Northwestern Kellogg
Uncertain
5
Bio/Vote History
Probably not, for several reasons. Regulation alone is not sufficient to create financial stability. This regulation was heavily lobbied. There are many possible arbitrage strategies (e.g. shadow banks). The next crisis will not be identical to the previous one.
Seru
Amit Seru
Stanford GSB
Uncertain
10
Bio/Vote History
Some policies are sensible. A host of others (especially those that assume regulators can forecast asset price "bubbles" before market does and regulate accordingly) will be counterproductive.
Stambaugh
Robert Stambaugh
UPenn Wharton
Uncertain
2
Bio/Vote History
Starks
Laura Starks
UT Austin McCombs
Agree
5
Bio/Vote History
Stein
Jeremy Stein
Harvard
Agree
5
Bio/Vote History
Stroebel
Johannes Stroebel
NYU Stern
Disagree
9
Bio/Vote History
Sufi
Amir Sufi
Chicago Booth
Uncertain
10
Bio/Vote History
This is too strong a statement to answer either way. It is the case that there were no financial crises in advanced economies from 1940 to the mid 1970s, which is worth noting when we think of policies that will reduce probability of crises.
Titman
Sheridan Titman
UT Austin McCombs
Disagree
5
Bio/Vote History
Van Nieuwerburgh
Stijn Van Nieuwerburgh
Columbia Business School
Disagree
8
Bio/Vote History
Tighter bank capital rules and stress testing have reduced the risk of banking crises. Some of the risk has migrated to shadow banks, who are less regulated.
Werner
Ingrid M. Werner
OSU Fisher School
Agree
8
Bio/Vote History
Whited
Toni Whited
UMich Ross School
Uncertain
7
Bio/Vote History