Volcker rule helped curb equity market risk – researchers
Banks had large trading exposures to equity market risk before the rule was introduced, they find
The Volcker Rule helped curb US banks’ large exposure to equity market risk, a paper published by the Federal Reserve finds.
In the paper, Antonio Falato, Diana Iercosan and Filip Zikes evaluate whether trading increases or decreases systemic risk in the US banking sector. They do this by estimating the sensitivity of weekly bank trading net profits to a variety of risk factors.
“We find that US banks had large trading exposures to equity market risk before the introduction of the Volcker Rule
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