Financial Intermediation

The Financial Intermediation department focuses on the role of intermediaries in the capital market, in particular banks and insurance companies, but also little or non-regulated market participants ("shadow banks") and their "off-balance-sheet" activities. Research focuses on the supervision and regulation of banks (e.g., liquidity regulation), the role of banks in the transmission of monetary policy into the real economy (e.g., the willingness to take risks at low-interest rates), the importance of safe investments in banking, or the consequences of digitalization and the green transformation for the business models of financial intermediaries.

In early March 2023, the failure of the U.S. Silicon Valley Bank brought back memories of the 2008 financial market crisis. SAFE Director and Department Director of Financial Intermediation at SAFE, Florian Heider, calls the bankruptcy “a wake-up call for Europe's banking regulation.” However, he emphasized that European financial market stability has improved significantly over the past fifteen years. He explained in various media, why no new systemic crisis is looming despite the bank failure in the U.S. and the difficulties of the Swiss bank Credit Suisse, for example, at DW Business news. For more articles by SAFE researchers on the topic, see SAFE in the Media. 

In an analysis for the European Parliament, SAFE researchers proposed regulatory changes as early as November 2022 to minimize risks posed by bank runs. This is also explained by Tobias Tröger, Director of the Law & Finance Cluster, in this news.