Anat Admati: The Challenge of Large, Complex Financial Institutions (5/7)

The video discusses the challenges and implications of high leverage in banking, focusing on Basel 3 regulations, equity's role in stability, and the systemic risks posed by excessive borrowing. It highlights the paradox of subsidizing leverage despite its negative externalities and explores potential regulatory solutions, including higher capital requirements. The impact of shadow banking on economic growth and the need for political will to enforce stricter regulations are also examined.

What is the significance of Basel 3 in the context of banking regulations?

How does excessive leverage create systemic risk in financial institutions?

What are the proposed capital requirements under Basel 3?

What is the role of equity capital in ensuring financial stability?

What misconceptions exist regarding the cost of equity in banking?

Explain the concept of negative externalities in the context of banking leverage.

Discuss the relationship between leverage and equity in banking.

In what ways can banks be required to self-insure against risks?

What are the challenges faced in implementing higher capital requirements?

How do political interests affect the regulation of banks?