Why Do Banks Fail and What to Do About It: The Role of Risk Management, Governance, Accounting, and More (Contributions to Finance and Accounting)

Authors\' Comment
Disclaimer
Introduction
Contents
About the Authors
1 The Role of Banking
	1 Banks Are at the Heart of the Financial System
	2 What Are Banks, What Do They Do and Why Do We Need Them?
	3 The Future of Banking and Money? The Big Tech Challenge and Payment Evolution
2 Risk Management and Banking Failures
	1 Introduction
	2 How Does the Regulator Respond to a Bank Failure?
	3 Preventing Failures and Managing Banks\' Risks Effectively
		3.1 New Risks: Climate Change
	4 New Risks: Digitisation, Technology, and the Financial Sector
	5 New Risks: Cyber Risk and the Financial Sector
		5.1 The Emergence of Cyber Risk for Banks
		5.2 Key Regulatory and Policy Considerations and Ways Ahead
			The NIST Cybersecurity Framework
			US Cyber Security Strategy Takes a New Regulation for the Cloud
3 The Role of the Accounting Information in Banking Failures
	1 Introduction
	2 The Financial Statement of Commercial and Investment Banks
	3 Mechanics of Accounting Misrepresentation
		3.1 Overstatement of Assets
	4 Creative Accounting, Underreporting of Liabilities and Off-BS Position
4 Corporate Governance and Banking Failures
	1 Introduction
	2 What Is Corporate Governance in the Banking Sector?
	3 Corporate Governance: Insights from Agency Theory
	4 Agency Costs: How to Reduce Them
	5 Corporate Governance and Banking: The Role of Agency Costs
	6 Agency Dilemma I: Shareholders and Depositors vs Directors
	7 Agency Dilemma II: Shareholders and Depositors vs Directors
5 Banking Resolution and Its Key Concepts and Tools
	1 What Is so Special About Banks and Why We Need Resolution Regimes
	2 The Resolution Objectives
		2.1 Preservation of Critical Functions
			Prevention of Contagion Effects
		2.2 Protection of Taxpayers
		2.3 Protection of Covered Counterparties, Insolvency Hierarchy and Segregation of Client Assets
		2.4 Efficiency of Resolution
		2.5 Other Objectives Included in the Key Attributes
	3 The Concept of Resolvability (Or the Corollary to the Resolution Objectives)
		3.1 The Definition
		3.2 The Content
		3.3 The Policy Operationalisation of Resolvability
	4 The Preconditions to Resolution and the PublicInterest Assessment
	5 The Resolution Tools
		5.1 Bail-In
			Bail-In Functioning and Sequence
			Exclusions from Bail-In
			`No Creditor Worse Off\' Principle, Valuation and Financing Arrangements
		5.2 Sale of Business
			Is It Possible to Sell a Failing Bank?
			The Roles Involved in a Sale
			Different Sale Strategies for Different Circumstances
		5.3 Asset Separation
		5.4 Bridge Bank
	6 The Loss Absorption Requirements
		6.1 The Total Loss-Absorbing Capacity for G-SIBs
		6.2 The MREL
	7 Ongoing Resolution Planning, Resolvability Assessmentand Testing
Conclusion
References