New Economics Papers
on Banking
Issue of 2006‒09‒11
six papers chosen by
Roberto J. Santillán–Salgado, EGADE-ITESM

  1. The Macroeconomic Implications of the New Banking Capital Regulation in Emerging Markets: A Duopoly Model Adapted to Risk Averse Banks By NIETO, Sebastián
  2. Risk Transfer with CDOs and Systemic Risk in Banking By Jan Pieter Krahnen; Berc Rustem; Volker Wieland; Stan Zakovic
  3. Financial Regulation: Emerging From The Shadows By Benink, H.A.
  4. Financing the alternative: renewable energy in developing and transition countries By Christa N. Brunnschweiler
  5. Mobile Payments in the Netherlands: Adoption Bottlenecks and Opportunities, or… Throw Out Your Wallets By Waris, F.S.; Mubarik, F.M.; Pau, L-F.
  6. Who gets debt relief ? By Chauvin, Nicolas Depetris; Kraay, Aart

  1. By: NIETO, Sebastián
    Abstract: In order to analyze the impact of the new banking capital regulation (Basel II) on the business cycle in an emerging economy, I develop a duopoly model composed of domestic and foreign banks. The principal results are: by the conduct of new banking capital regulation, the assessment of credit risk carried out by an international bank in a given country not only affects the total loans in that country but also the total assets supplied in other countries. Second, analyzing risk-averse banks, as portfolio diversification increases, the change in loans allocated in a given country by an international bank as a proportion of the original investment and the total level of loans for that country can be harshly affected by the behavior of a foreign bank following only “news” through the new capital regulation. Finally, even in the case that portfolio diversification increases without limits, the macroeconomic implication of a change of credit risk estimation, via the new capital regulation, is larger when banks are risk-neutral than risk-averse.
    Date: 2004–12–01
  2. By: Jan Pieter Krahnen (Imperial College, London); Berc Rustem (Imperial College, London); Volker Wieland (University of Frankfurt); Stan Zakovic (Imperial College London)
    Abstract: Large banks often sell part of their loan portfolio in the form of collateralized debt obligations (CDO) to investors. In this paper we raise the question whether credit asset securitization affects the cyclicality (or commonality) of bank equity values. The commonality of bank equity values reflects a major component of systemic risks in the banking market, caused by correlated defaults of loans in the banks’ loan books. Our simulations take into account the major stylized fact of CDO transactions, the nonproportional nature of risk sharing that goes along with tranching. We provide a theoretical framework for the risk transfer through securitization that builds on a macro risk factor and an idiosyncratic risk factor, allowing an identification of the types of risk that the individual tranche holders bear. This allows conclusions about the risk positions of issuing banks after risk transfer. Building on the strict subordination of tranches, we first evaluate the correlation properties both within and across risk classes. We then determine the effect of securitization on the systematic risk of all tranches, and derive its effect on the issuing bank’s equity beta. The simulation results show that under plausible assumptions concerning bank reinvestment behaviour and capital structure choice, the issuing intermediary’s systematic risk tends to rise. We discuss the implications of our findings for financial stability supervision.
    JEL: G28
    Date: 2006–03–01
  3. By: Benink, H.A. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Keywords: regulatory;incentives;shadow committee;banking;subordinated debt;deposit insurance;Neo-Austrian finance;internal ratings;market discipline;capital requirements;Basel Committee;
    Date: 2001–06–15
  4. By: Christa N. Brunnschweiler (Center of Economic Research, Swiss Federal Institute of Technology Zurich (ETH))
    Abstract: This paper examines the determinants of credit allocation to renewable energy firms in developing and transition countries. Using a simple en- dogenous growth model, we show that the development of the renewable energy sector, i.e. the diversification of renewable energy resources used in primary energy production, depends on the quality of financial intermedia- tion, debtor information costs to banks, and financing needs of renewable energy firms. Policies should aim at increasing financial sector perfor- mance through better institutional frameworks and improving financing conditions for new energy firms. The empirical analysis confirms the pos- itive effect of financial intermediary development on the renewable energy sector.
    Keywords: Financial intermediation, banks, renewable energy, economic growth
    JEL: Q42 G10 O41
    Date: 2006–03
  5. By: Waris, F.S.; Mubarik, F.M.; Pau, L-F. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: The purpose of this research report is to analyse the mobile payment market size and its revenue basis, as well as adoption bottlenecks, in view of establishing the adoption and deployment of mobile banking services in The Netherlands. The research report describes various aspects with regard to mobile payments/mobile banking in The Netherlands. Issues like implementation, regulatory framework, estimated business case, deployment scenario’s, recommended business model, a SWOT analysis of the technical solutions, organisational bottlenecks, an analysis of the reasons for success and failures, and open issues and challenges are addressed. The main aim is to try to answer the question whether there is a market in The Netherlands for mobile banking services, and providing an analysis of why M-banking services have not been so successful in The Netherlands. Furthermore, it needs to be mentioned that the focus of this paper was on micro-payments, which are generally considered to be payments of up to €10.
    Keywords: Mobile payments;Mobile banking;The Netherlands;Business Models;Mobiel betalen;Mobiel bankieren;Nederland;Business modellen;
    Date: 2006–03–17
  6. By: Chauvin, Nicolas Depetris; Kraay, Aart
    Abstract: The authors use preliminary results from an ongoing effort to construct estimates of debt relief to study its allocation across a sample of 62 low-income countries. They find some evidence that debt relief, particularly from multilateral creditors, has been allocated to countries with better policies in recent years. Somewhat surprisingly, conditional on per capita incomes and policy, more indebted countries are not much more likely to receive debt relief. But countries that have large debts especially to multilateral creditors are more likely to receive debt relief. The authors do not find much evidence that debt relief responds to shocks to GDP growth. Finally, most of the persistence in debt relief is driven by slowly changing country characteristics, indicating that it may be difficult for countries to " exit " from cycles of repeated debt relief.
    Keywords: External Debt,Banks & Banking Reform,Strategic Debt Management,Foreign Direct Investment,Economic Theory & Research
    Date: 2006–08–01

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