Gino Landuyt’s scientific contributions

As a result of the 2008 financial crash governments and central banks had to rescue banks which had become insolvent or illiquid, and whose failure threatened the Western financial system. The bill for this taxpayer funded bailout came to over USD 20 trillion globally, including assistance from US, EU, UK and Japanese governments and the IMF, and had an impact on medium term economic growth prospects. It also triggered public indignation as the taxpayer perceived that rescues of this kind solidified an unfair institutional system in which profits are privatised but losses are socialised. The events of 2007-2009 and the recent eurozone sovereign credit crisis have re-ignited the debate on the principle of the taxpayer-funded central bank lender of last resort (LOLR) and the issues around moral hazard. In this article we re-visit the shortcomings of the current public sector LoLR arrangement and investigate whether a viable alternative exists to support banks that are experiencing funding stresses. We focus on alternatives to the public sector central bank being the backstop liquidity provider of last resort for a bank experiencing funding (as opposed to capital loss) stress, and recommend a viable solution that would minimise taxpayer exposure at the time of the next crash.

New banking and investment business models to navigate the post-financial crisis environment. The financial crisis of 2007-2008 has discredited business models in the banking and fund management industries. In The Future of Finance, Moorad Choudhry and Gino Landuyt argue that banks must realign their business models, implying a lower return-on-equity; diversifying their funding sources; and increasing liquidity reserves. On the investment side, the authors discuss how diversification did not reduce risk, but rather amplified it, and failed to stabilize returns. The authors conclude that the clear lesson from the crisis is to know one's risk. A lesson that is best served by concentrating on assets and sectors that you understand. Examines the weaknesses in the business models of many institutions, as well as the theoretical foundation for professionals in the field of finance. Identifies the shortcomings of Modern Portfolio Theory. Addresses how investment managers can find new strategies for creating "alpha" and why they need to re-vamp their fee structures. Filled with in-depth insights and practical advice, The Future of Finance will provide bankers and investment managers with a guide to realigning their businesses in order to prosper in the post-crisis financial markets.

Banks and Moral HazardAddressing Too-Big-to-Fail: Mitigating Moral Hazard RiskMacroprudential Regulation: Regulating Bank Systemic RiskConclusion

Basic Concepts of Bank Asset-Liability ManagementAsset and Liability Management: The ALCOALCO ReportingPrinciples of Banking Liquidity Risk ManagementMeasuring Bank Liquidity Risk: Key MetricsInternal Funding Rate PolicyConclusion

The New Bank Business ModelCorporate GovernanceLiquidity Risk ManagementThe Liquid Asset BufferConclusion

Bonuses and a Moral DilemmaA Distorted Remuneration ModelUnsuitable Personal BehaviorConclusion

A Belief in Free and Self-Adjusting MarketsModigliani and MillerMarkowitz and Diversification TestedMinsky Once AgainLessons to Be Learned by Central BanksConclusion