Search Options
Home Media Explainers Research & Publications Statistics Monetary Policy The €uro Payments & Markets Careers
Suggestions
Sort by

Agnese Leonello

Research

Division

Financial Research

Current Position

Economist

Fields of interest

Financial Economics

Email

agnese.leonello@ecb.europa.eu

Education
2007-2011

PhD Economics, European University Institute, Florence, Italy

2005-2007

MA Economics, University of Naples "Federico II", Italy

2002-2005

BA Economics, University of Naples "Federico II", Italy

Professional experience
2014-

Economist - Financial Research Division, Directorate General Research, European Central Bank

2011-2014

Post-Doctoral Fellow - Financial Institutions Center, The Wharton School of the University of Pennsylvania, Philadelphia, USA

Awards
2012

Best PhD Thesis on Financial Stability, Fondation Banque Centrale du Luxembourg

2010

Fourth Year completion grant, European University Institute, Florence, Italy

7 July 2016
WORKING PAPER SERIES - No. 1932
Details
Abstract
We develop a model where banks invest in reserves and loans, and trade loans on the interbank market to deal with liquidity shocks. Two types of equilibria emerge, depending on the degree of credit market competition and the level of aggregate liquidity risk. In one equilibrium, all banks keep enough reserves and remain solvent. In the other, some banks default with positive probability. The latter equilibrium exists when competition is not too intense and high liquidity shocks are not too likely. The model delivers several implications concerning the severity of crises and credit availability along the business cycle.
JEL Code
G01 : Financial Economics→General→Financial Crises
G20 : Financial Economics→Financial Institutions and Services→General
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
28 February 2017
WORKING PAPER SERIES - No. 2032
Details
Abstract
Banks are intrinsically fragile because of their role as liquidity providers. This results in underprovision of liquidity. We analyze the effect of government guarantees on the interconnection between banks' liquidity creation and likelihood of runs in a model of global games, where banks' and depositors' behavior are endogenous and affected by the amount and form of guarantee. The main insight of our analysis is that guarantees are welfare improving because they induce banks to improve liquidity provision although in a way that sometimes increases the likelihood of runs or creates distortions in banks' behavior.
JEL Code
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G28 : Financial Economics→Financial Institutions and Services→Government Policy and Regulation
22 May 2017
WORKING PAPER SERIES - No. 2067
Details
Abstract
This paper studies the effects of government guarantees on the interconnection between banking and sovereign debt crises in a framework where both the banks and the government are fragile and the credibility and feasibility of the guarantees are determined endogenously. The analysis delivers some new results on the role of guarantees in the bank-sovereign nexus. First, guarantees emerge as a key channel linking banks’and sovereign stability, even in the absence of banks’holdings of sovereign bonds. Second, depending on the specific characteristics of the economy and the nature of banking crises, an increase in the size of guarantees may be beneficial for the bank-sovereign nexus, in that it enhances …financial stability without undermining sovereign solvency.
JEL Code
G01 : Financial Economics→General→Financial Crises
G18 : Financial Economics→General Financial Markets→Government Policy and Regulation
H63 : Public Economics→National Budget, Deficit, and Debt→Debt, Debt Management, Sovereign Debt
12 June 2017
RESEARCH BULLETIN - No. 35
Details
Abstract
The recent financial and sovereign debt crises showed that providing public guarantees to banks may pose serious threats to sovereign solvency, despite their short-term beneficial effects on financial stability. This article analyses the role that public guarantees to banks play in the bank-sovereign nexus and offers a more nuanced assessment of their implications for sovereign debt crises. Depending on the nature of the banking crisis and the specific characteristics of the economy, guarantees may improve financial stability without undermining sovereign solvency, thus generating a positive feedback loop between bank and sovereign stability.
JEL Code
G01 : Financial Economics→General→Financial Crises
G18 : Financial Economics→General Financial Markets→Government Policy and Regulation
H63 : Public Economics→National Budget, Deficit, and Debt→Debt, Debt Management, Sovereign Debt
27 May 2019
WORKING PAPER SERIES - No. 2287
Details
Abstract
The architecture of supervision – how we define the allocation of supervisory powers to different policy institutions – can have implications for policy conduct and for the economic and financial environment in which these policies are implemented. Theoretically, an integrated structure for monetary policy and supervision brings important benefits arising from better information flow and policy coordination. Aggregate supervisory information may significantly improve the conduct of monetary policy and the effectiveness of the lender of last resort function. As long as the process towards an integrated structure does not shrink the set of available tools, monetary policy and supervision are no less effective in pursuing their objectives than a separated structure. Additionally, an integrated structure does not seem to be correlated with more price and/or financial instability, as suggested by analysing a large global set of countries with different supervisory set-ups. A centralised structure for supervision entails significant benefits in terms of fewer opportunities for supervisory arbitrage by banks and less informational asymmetry. A large central supervisor can take advantage of economies of scale and scope in supervision and gain a broader perspective on the stability of the entire banking sector, which should result in improved financial stability. Potential drawbacks of a centralised supervisory structure are the possible lack of specialisation relative to local supervisors and the increased distance between the supervisor and the supervised institutions. We discuss the implications of our findings in the euro area context and in relation to the design of the Single Supervisory Mechanism (SSM).
JEL Code
E5 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G38 : Financial Economics→Corporate Finance and Governance→Government Policy and Regulation
Network
Discussion papers
2018
Journal of Economic Theory
Government Guarantees and Financial Stability
  • Allen, F., Carletti, E., Goldstein, I. and Leonello, A.
2018
Journal of Financial Economics
Government Guarantees and the Two-way Feedback between Banking and Sovereign Debt Crises
  • Leonello, A.
2017
Review of Finance
Credit Market Competition and Liquidity Crises
  • Carletti, E. and Leonello, A.
2015
Journal of Financial Regulation
Moral Hazard and Government Guarantees in the Banking Industry
  • Allen, F., Carletti, E., Goldstein, I. and Leonello, A.
2011
Oxford Review of Economic Policy
Deposit Insurance and Risk-Taking
  • Allen, F., Carletti, E. and Leonello, A.
2017
Achieving Financial Stability: Challenges to Prudential Regulation, eds. Evanoff, D.D., Kaufman, G., Leonello, A., and Manganelli, S., Chicago Fed International Banking Conference proceedings
Government Guarantees to Financial Institutions: Banks’ Incentives and Fiscal Sustainability
  • Leonello, A.
2016
Handbook of European Banking, eds. Casu, B., and Beck, T., Palgrave Macmillan UK
Regulatory reforms in the European banking sector
  • Carletti, E. and Leonello, A.