Martin Hellwig

Published in 2013, the book argues that banks should hold substantially more equity and rely far less on debt financing. Hellwig and Admati systematically dismantle common industry arguments against higher capital requirements, contending that such reforms would reduce systemic risk without constraining lending.

Hellwig is a director at the Max Planck Institute for Research on Collective Goods in Bonn, Germany. Before joining the Max Planck Society, he was a professor of economics at the University of Mannheim.

The book was co-authored with Anat Admati, a professor of finance and economics at the Stanford Graduate School of Business. Together they drew an analogy to Hans Christian Andersen's tale of the emperor's new clothes, arguing that the banking industry's justifications for high leverage are transparently flawed.

Hellwig has published extensively on how complex interconnections among financial institutions amplify crises, going beyond the analysis of individual bank risk. His work emphasizes that the incentive structures within banks encourage excessive risk-taking that regulators must address through structural reform rather than incremental adjustments.